- (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that a part of the interest amounting to Rs. 6,769 paid by the assessee on bank overdraft account as relatable to payment of advance tax was not an admissible deduction in the computation of the assessee's business income ? "
(2.) This reference arises in respect of the assessment year 1970-71, for which the relevant previous year ended on 31st of December, 1969.
(3.) The assessee had an overdraft account with the bank, On 12th December, 1969, i.e., a few days before the end of the assessee's accounting year on 31st December, 1969, the account showed a debit balance of Rs. 1,39,412. The assessee paid an advance tax of Rs. 18,05,000 on 15th December, 1969, which increased the overdraft to Rs. 14,63,593 by 31st December, 1969. The ITO holding that the payment of advance tax could not be treated as business expense disallowed the proportionate interest amounting to Rs. 6,769 payable by the assessee to the bank.;