N.D.Ojha, J. - (1.) The Commissioner of Income-tax, Central (Delhi-II), New Delhi, has made this application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as " the Act"), with a prayer that the Income-tax Appellate Tribunal, Delhi Bench " A ", Delhi, may be required to refer 24 questions of law to this court for its opinion. The assessee-opposite party in the instant case is M/s. J.K. Synthetics Ltd., Kamla Tower, Kanpur, and the assessment year involved is 1971-72.
(2.) Having heard counsel for the parties, we are of the opinion that questions Nos. 14 to 20, 23 and 24 are not questions of law arising out of the order of the Tribunal and are concluded by the findings of fact recorded by the Tribunal. Questions Nos. 21 and 22 arise out of a claim made by the assessee in regard to the legal expenses and interest in respect of two loans obtained by the assessee from the Government of Rajasthan. These loans were raised by the assessee for setting up acrylic and cement plants. The claim of the assessee was disallowed by the Income-tax Officer and his order was affirmed in appeal by the Appellate Assistant Commissioner, However, the Tribunal allowed the claim of the assessee relying on a decision of a Division Bench of this court in Prem Spinning and Weaving Mills Company Ltd. v. CIT [1975] 98 ITR 20. A perusal of the judgment in the said case indicates that this judgment was rendered on the basis of the law laid down by the Supreme Court in India Cements Ltd. v. CIT [1966] 60 ITR 52. The question which arose for consideration in the aforesaid two decisions was similar to what has been raised in the instant case as to whether the expenses incurred in respect of obtaining loans were to be treated as capital expenditure or revenue expenditure allowable as a deduction. In the case of Prem Spinning and Weaving Mills Co. Ltd. [1975] 98 ITR 20 (All), it was held that the said amount of expenditure was allowable as a deduction. The same view was taken by the Supreme Court in the case of India Cements Ltd. [1966] 60 ITR 52 also. In this case, the Supreme Court further pointed out that the act of borrowing money was incidental to the carrying on of business, the loan obtained was not an asset or an advantage of enduring nature, the expenditure was made for securing the use of money for a certain period and it was irrelevant to consider the object with which the loan was obtained. The Tribunal not only allowed the claim of the assessee in regard to the expenses aforesaid on the basis of the two decisions referred to above but also dismissed the application of the Commissioner of Income-tax for referring these two questions to this court under Section 256(1) of the Act holding that in view of the two decisions aforesaid, these questions were only of academic value. We do not find any cogent reason to take a different view.
(3.) At this place, we may point out that counsel for the Commissioner of Income-tax placed reliance on the decision of the Supreme Court in Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167. That is, however, clearly distinguishable inasmuch as that was not a case where amounts may have been borrowed by a running concern in connection with its business but was a case of loan being taken for acquisition and installation of plant and machinery. Reliance was placed by counsel for the Commissioner of Income-tax on certain other decisions also. We, however, do not consider it necessary to refer to them in detail because those were not cases of expenditure for obtaining loans by a running concern in connection with its business.;