B.P.Jeevan Reddy, C.J. - (1.) Following two questions have been referred by the Tribunal under Section 256(2) of the Income-tax Act, 1961, for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in allowing the claim of the assesses in respect of interest paid to M/s. J. K. Woollen Manufacturers Ltd. ?
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Bhumi and Bhavan Kar amounting to Rs. 5,618 was an allowable deduction for the assessment year 1969-70 ?" 2. We shall state the relevant facts in each question separately. So far as question No. 1 is concerned, the question is whether the interest paid by the owner of a property on the mortgage executed by him in respect of that property is deductible under Clause (iv) of Sub-section (1) of Section 24 of the Act. The assessment years concerned herein are 1969-70, 1970-71 and 1971-72. By the Finance Act, 1968, Clause (iii) of Sub-section (1) of Section 24 of the Act was deleted and certain words were inserted in Clause (iv). For the sake of convenience, we may read both Clause (iii) as well as Clause (iv) as amended by the said Finance Act. Clause (iii) reads ; "(iii) where the property is subject to a mortgage or other capital charge, the amount of any interest on such mortgage or charge. (iv) where the property is subject to an annual charge (not being a charge created by the assessee voluntarily or a capital charge), the amount of such charge."
(3.) It is evident from a reading of these two clauses that Clause (iii) which permitted any amount paid by way of interest on a mortgage or other capital charge was deleted and Clause (iv) was amended in such a manner as to make only that annual charge which is not voluntary or which does not amount to a capital charge alone deductible. Even if we agree that the expression "annual charge" includes mortgage--we, of course, do not wish to express any final opinion on this aspect--the interest paid on such mortgage would not be deductible for the simple reason that the mortgage was not involuntary. So long as the mortgage is voluntary, the interest paid thereon is not deductible under Clause (iv). (We may clarify here that no claim has been made under Clause (vi) of Sub-section (1) of Section 24 and, therefore, we need not deal with that clause).;