1973 (4) TMI 32

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..... ndian Income-tax Act, 1922 (hereinafter referred to as " the Act "), the Income-tax Appellate Tribunal, Allahabad, has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the assessee was entitled to the deduction of interest and litigation expenses from the share of the profit derived by him from Niranjan Lal Bhargava & Co.? .....

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..... g business nor had the loans been raised in connection with the assessee's business. Before the Income-tax Appellate Tribunal the assessee based his claim under section 10(2)(xv) of the Act as expenditure incurred wholly and exclusively for the purpose of the business. The Tribunal has accepted this claim and has held that the assessee was entitled to claim interest and litigation expenses as exp .....

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..... n November 15, 1952, for the recovery of the balance with interest. The suit was decreed with costs on April 12, 1955, by the civil judge, Allahabad. The decree included a sum of Rs. 15,270 on account of interest and costs. This figure together with the interest payable to the Bombay Life Insurance Company came to Rs. 16,755. Deducting a sum of Rs. 188 on account of interest received by the assess .....

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..... een raised by the assessee for the purposes of his business and interest payable on such loans would clearly be an allowable expenditure under section 10(2)(xv) of the Act. The learned counsel for the department does not dispute this position. He, however, argues that the position changed when the cinema business was taken over by a partnership firm. We fail to understand how this fact would chan .....

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..... ability on account of two loans, the firm would have been entitled to claim deduction in respect of these loans but since the assessee did not do so and retained the liability he alone was entitled to claim the deduction. In the instant case, the assessee claimed deduction against his share income and not against the profits of the firm as a whole. We are, therefore, of the opinion that the view t .....

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