DIPAK KUMAR SEN, J. - (1.) ON an application of the Revenue under s. 66(2) of the Indian IT Act, 1922, the Tribunal as directed has referred the following questions of law arising out of its order for the opinion of this Court ? "Assessment year 1959-60 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 8,617 on account of interest paid by the assessee on the overdrafts taken by him fell within the purview of s. 12(2) of the Indian IT Act, 1922, and was, therefore, allowable as a deduction? Assessment year 1960-61 : 2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the sum of Rs. 10,246 on account of interest paid by the assessee on the overdraft taken by him fell within the purview of s. 12(2) of the Indian IT Act, 1922, and was, therefore, allowable as a deduction ?"
(2.) AS noted above, the assessment years involved are 1959-60 and 1960-61, the accounting years ending on March 31, of the calendar years 1959 and 1960. During the assessment before the ITO, Thomas Leslie Martin, the assessee, claimed that interest paid by him on overdrafts obtained by him, be deducted from his income by way of dividends. The ITO disallowed a part of the claim on the ground that the main reason for the overdraft was that the assessee was short of funds for making his tax payments.
(3.) ON an appeal by the assessee, the AAC found that in each of the two years involved, the assessee had a convertible surplus, even after meeting his tax liabilities, out of his income from dividend and on that ground the appeal of the assessee was allowed.;