Aloke Chakrabarti, J. - (1.) The facts relevant for the present reference are that the business of the appellant is to construct flats and sell at profit. Interest has been paid by the appellant in pursuance of an agreement entered into between the appellant and M/s. Sagar Shipping Co. Ltd., whereunder the appellant was paid an advance of Rs. 4,33,000 as price of the flat deliverable within a stipulated period. As the flat could not be delivered during the stipulated period under the agreement the appellant had to pay interest to M/s. Surendra Overseas Ltd., with which M/s. Sagar Shipping Co. Ltd. had since been amalgamated. It is contended by the appellant that income out of the business transaction should be assessed as business income and the interest amount of Rs. 6,74,602 should be deducted from the business income. This deduction has been claimed under Section 24(1)(vi) of the Income-tax Act, 1961.
(2.) The two assessment years 1985-86 and 1986-87 are involved in the present reference and by the respective assessment orders passed for the said years, the claim of the assessee has been refused. The appeals taken before the Commissioner of Income-tax (Appeals) were decided by a common judgment rejecting the aforesaid contention. In the appeal before the Income-tax Appellate Tribunal also the assessee did not succeed on the aforesaid ground. The Tribunal has also recorded a finding that there is no material to record a finding that the advance received by the assessee for sale of flat was utilised in the construction of the said flat.
(3.) Heard Mr. A. K. Roy Chowdhury, learned senior counsel for the appellant, and Mr. P. K. Mallick, learned senior counsel for the respondent.;