TMI Blog1963 (5) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... his claim and an appeal to the Appellate Assistant Commissioner also failed. In the further appeal to the Tribunal, the claim was made as an interest payment on capital borrowed for business purposes. This contention was rejected by the Tribunal and on this head, a question has been referred for the decision of this court. On the passing of the Debtor and Creditor Ordinance by the Malayan Government after the reoccupation, certain liabilities which had been paid off in terms of the Japanese currency during the period of occupation were revived. In the discharge of such obligations, the assessee firm paid during the previous year relevant to the assessment year 1951-52, a total of 66,541 dollars. The Appellate Tribunal purported to disallow this claim. The relevant contention on this head included a claim by the assessee that in so far as the revival of the outstandings was concerned, the principal amounts should not be brought into the computation as profits assessable during the years to which such realisations related, that is, the assessment years 1950-51 to 1955-56. In respect of the above contentions, on the application of the assessee, the following questions stand refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the payment of interest in excess of this percentage and this disallowance was ultimately upheld by the Tribunal. The question canvassing the correctness of this disallowance is: Whether on the facts and in the circumstances of the case, the conclusion that there is material or evidence to hold that the payment of interest at 9 per cent. per annum on the amounts advanced by three of the partners in their individual rights is not an allowable deduction is correct in law? Taking the first question in T.C. No. 160 of 1960, it seems to us that the interest payment on the unpaid estate duty can hardly be brought within the scope of section 10(2)(iii) as interest on borrowed capital or under section 10(2)(xv). These are the only two grounds upon which the matter was argued before us. That the estate duty payable was a statutory levy and has no connection with the carrying on of any business hardly requires to be stated. Such duty is payable on the passing of property on the death of a person. Whether or not such property consists of business makes no difference to the validity of the demand for estate duty. It was vaguely suggested as the reason for invoking either of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rao Sahib on behalf of the Income-tax Commissioner, it is composite payment and such composite payment is not within the purview of the clause. The language of the clause is plain and does not admit much of an argument to see that the expenditure in this case is not an exclusive expenditure for the purpose of the business and, therefore, clause (xv) has no application. It was argued that in that case there were what may be called nonbusiness properties in respect of which also estate duty was payable, while in this case the only properties were business properties; and that on the basis of these observations, if it is not a case of a composite payment including business and non-business properties, the decision would justify the allowance under section 10(2)(xv). We are not disposed to agree. Since it was clearly established that it was a composite payment in that case and the expenditure was not wholly and exclusively for the purpose of the business, the matter was dealt with from that angle. The learned judge cannot be understood as having stated that in the case of a death duty in respect of business properties alone, an interest payment on unpaid death duty would be an exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest and was paid in full, there would have been a receipt on account of both principal and interest. But, if the re-payment was only partial, then there would be a receipt on account of principal or interest according as the amount has been lawfully appropriated to one head or the other. It is not denied that in view of this decision, question No. 2 has to be answered in favour of the department and question No. 3 in favour of the assessee. T.C. No. 121 of 1962. Learned counsel for the assessee does not press the second question. It is therefore not answered. It is not in dispute that the assessee is a money-lending firm and in lieu of a debt owed to it, it took over the three items of grants for tin mine leases on August 22, 1930. These mine leases were renewable every ten years. But the first of these mines ceased to yield in 1937 and the second in 1940. On the lapse of the lease periods of these two leases, they were accordingly not renewed by the assessee. The third mine, Grant No. 2149, was continued to be worked and it was apparently renewed in or about 1940 or 1941. It is common ground that this mine stopped working in July 1950, that is, during the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the claim holding that in each year when a part of the property was sold, the assessee should have made an estimate of his loss on that particular sale and should have made the claim in that year. The view was, however, taken by the Rangoon High Court that until such a transaction had been completed, it could not be known what the loss would be. It is true that this decision appears to lend some colour to the argument advanced on behalf of the assessee. But we are not satisfied that it can be applied to the facts of this case. Here was an admittedly wasting asset which had been taken in lieu of the outstanding. The income from these tin mines was being submitted for assessment year after year and where an asset or any part of it which represented the stock-in-trade became lost, the loss is referable to that particular year in which it occurred. A Bench of this court to which one of us was a party had in T.C. No. 96/1954 occasion to refer to the case decided by the Rangoon High Court cited above and pointed out that in that case the assessee did not earn a profit at any stage of the transaction and, therefore, did not bring the transaction to the profit and loss account in any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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