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TMI Blog1986 (6) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal as directed has referred the following questions of law arising out of its order for the opinion of this court? "Assessment year 1959-60 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 8,617 on account of interest paid by the assessee on the overdrafts taken by him fell within the purview of section 12(2) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed a part of the claim on the ground that the main reason for the overdraft was that the assessee was short of funds for making his tax payments. On an appeal by the assessee, the Appellate Assistant Commissioner found that in each of the two years involved, the assessee had a convertible surplus, even after meeting his tax liabilities, out of his income from dividend and on that ground the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing investments and, therefore, the interest paid on such overdraft came within section 12(2) of the Indian Income-tax Act, 1922, and was, therefore, deductible from his income from dividend. In coming to the said conclusion, the Tribunal followed the decision of the Supreme Court in Eastern Investments Ltd. v. CIT [1951] 20 ITR 1. The controversies raised in the questions referred, in our v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [1951] 20 ITR 1 (SC), the question of deduction of interest arising out of borrowing for payment of income-tax dues was not before the Supreme Court. In the facts of that case, the assessee, a company, agreed to reduce its share capital by Rs. 50 lakhs with the permission of the court and took over from a shareholder debentures in lieu of shares of the face value of Rs. 50 lakhs. The interest pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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