JUGGILAL KAMLAPAT A FIRM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Allahabad Bench (hereinafter referred to as the Tribunal), under section 66(1) of the Income-tax Act of 1922. The assessment years in respect of which the reference has been made are 1940-41, 1941-42, 1942-43, 1943-44, 1944-45, 1945-46 and 1946-47. The assessees are a firm, Messrs. Juggilal Kamlapat of Kanpur. In the account books of the assessee firm, there is an account styled as Kamlapat Ji Dharam Khata. The following amounts were credited as interest in this account in each of the assessment years noted below :

(2.) THE assessees claim that the balance in the Kamlapat Ji Dharam Khata account was utilised for the purpose of its business and was treated as a loan and as such the interest paid by the assessee firm to Kamlapat Ji Dharam Khata was business expenditure admissible under section 10(2)(xv) of the Income-tax Act. THE facts as given in the statement of case submitted by the Tribunal in short are as follow :

(3.) WE are in respectful agreement with the observation of the Chief Justice in the case mentioned above.