Law:

Section:

Section 24(1)(vi) of the Income-tax Act, 1961 - Income from house property - Deductions - Whether where unsecured debentures are issued on reduction of share capital of company and used for acquisition of house property, interest thereon is allowable as deduction under section 24(1)(vi) in computing income from house property - Held, yes Facts The assessee-company claimed that a part of the unsecured debentures issued on a reduction of share capital was borrowed capital within the meaning of section 24(1)( vi) with which certain house property was acquired and interest payable on such borrowed capital was allowable as deduction in computing the assessee's income from house property. The ITO rejected the assessee's claim. On appeal to the AAC, the matter was remanded to the ITO for determining the truth of the assessee's claim. The Tribunal affirmed the order of the AAC. On reference : Held The Tribunal had not recorded any finding that any part of the unsecured debentures issued on reduction of share capital of the company was borrowed capital with which the house property was acquired within the meaning of section 24(1)(vi ). If it was found that the property was initially purchased with the borrowed capital, then interest payable on such capital would be allowed as deduction in computing income from house property. Therefore, the matter was remanded to the ITO for determining the question in the light of these observations. A.N. Moitra and B.K. Naha for the Applicant. S.K. Bagaria for the Respondent. Judgment Chandra, CJ.- In this case the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the…

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