Empire Stores vs Commissioner Of Income-Tax, New ...
1989 Latest Caselaw 477 Del

JUDGMENT

Kirpal, J.

1. In this application under section 285(2) of the Income-tax Act, the petitioner seeks reference of the following question of law to this court :

"That on the facts and circumstances of the case and in view of the clear explanation offered by the petitioner, the Income-tax Appellate Tribunal has erred in upholding that the difference of Rs. 46,584, the interest paid to the bank and that charged from partners on their debit balance be taxed, ignoring the opening debit balance of the partners and of the bank and further ignoring the applicability of section 80V and 182(4) of the Income-tax Act, 1961 ?"

2. The Income-tax Appellate Tribunal has come to the conclusion that the money which was borrowed from the banks was diverted by the partners for personal use. Money was borrowed by paying 15 per cent; interest and only 6 per cent was charged from the partners. 9 per cent interest which was paid by the firm was disallowed.

3. The question which has been framed presumes that the opening debit balances of the partners had been ignored and the Tribunal also ignored the applicability of sections 80V and 182(4) of the Act.

4. We, however. find that the Tribunal has referred to the decision of the Commissioner (Appeals) who had examined the accounts of the partners and had referred to the debit balance of three of the partners and the credit balance of the four others. After taking the accounts of all the partners into consideration, the Tribunal found as a fact that there had been an increase in the debit balance, and, therefore, the monies which had been drawn from the banks had been diverted for the personal use of the partners. This is a finding of fact and, in our opinion, no question of law arises.

5. Section 80V would apply only if it had been fount that money which was borrowed had been used for payment of taxes. As already noted, the finding of the Tribunal was that the money which had been borrowed, or at least part of it, had been used by the partners for their own personal use, which obviously means that the essential prerequisite for claiming allowance under section 80V was not fulfillled, we also do not find that section 182(4) applies in the present case.

6. For the aforesaid reasons. We are of the opinion that no question of law arises. The petition is dismissed. No orders as to costs.