TMI Blog1992 (4) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... o various parties, namely, Shri Ramkrishna Bajaj (HUF) Shri Kamalnayan Bajaj (HUF), Shri Shishir Kumar Bajaj. etc. The interest earned by the assessee was Rs. 2,68,613. The assessee paid interest of Rs. 1,40,616 to the parties from whom he had borrowed funds. One of such party is M/s. Jeevan Ltd., to which interest of Rs. 74,096 was paid. Out of the interest earned, the assessee deducted the interest paid by him and offered for taxation net interest income of Rs. 1,27,997 under the head " other sources ". During the course of assessment proceedings, the ITO had enquired of the assessee as to how interest paid on the money borrowed for paying wealth-tax could be allowed in computing the interest income under the head " other sources ". The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived. It has further been stated that if the said loan had not been taken, the assessee would have encashed loan given by him, thereby resulting in reduction of interest income. Had the assessee done so, perhaps department could not have intervened because nobody can force an assessee to earn more but here the fact is that interest can be allowed under the head 'Other Sources' only to the extent, it has been paid for earning the income under section 57 of the Income-tax Act. Since in the instant case, money has been borrowed to pay wealth-tax, it cannot be allowed as deduction. Therefore an amount of Rs. 48,675 worked @ 14% on Rs. 5 lakhs shall be disallowed. " In appeal, the CIT(A) upheld the action of the ITO. In doing so, he relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us a copy of the order of the Tribunal in the case of Shri Ramkrishna Bajaj [IT Appeal No. 1982 (Bom.) of 1988 dated 4-12-1991 and pointed out that on a similar issue which came up before the Tribunal in that case, the Tribunal was pleased to remit the matter back to the file of the CIT(A) " with directions to determine the claim of the assessee in terms of his letter dated 23-2-1987 and the law laid down by the Supreme Court in the case referred to supra and decide the issue afresh ". He, therefore, urged that we should likewise sent the present case also to the CIT(A) with appropriate directions. 5. Even on the merits of the case, the learned counsel for the assessee submitted that in view of the decision of the Hon'ble Bombay Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her we should delete the disallowance of Rs. 48,675 made by the Income-tax authorities or remit the matter to the file of the CIT(A) for a fresh decision as was done in the case of Shri Ramkrishna Bajaj. 6. The learned Representative for the department, on the other hand, submitted that since the assessee's case is fully covered by the aforesaid decision of the Hon'ble Supreme Court in the case of Smt. Padmavati Jaikrishna and since in deciding the appeal in favour of the revenue, the CIT(A) has followed the said decision, it is not necessary to send the matter as urged by the assessee or accepted by the Tribunal in the case of Shri Ramkrishna Bajaj. 7. We have carefully considered the rival submissions of the parties and we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and interest and to meet household expenses etc., by means of a loan borrowed but that consideration was entirely irrelevant. Even as regards advance payment of tax the purpose of borrowing the money in order to pay advance tax was to discharge the statutory obligation upon the assessee ; receipt of interest on that tax was purely incidental ; and therefore the assessee could not claim the deduction on that ground either. " In our considered opinion, the decision in the case of H.H. Maharani Shri Vijaykuverba Saheb of Morvi is clearly distinguishable on the basis of the facts and circumstances obtaining in that case and with which we are concerned in the present appeal. Both the Hon'ble Supreme Court and the Hon'ble Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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