Law: Income Tax Act, 1922

Section: 10(2)(iii)

Section 36(1)(ii) of the Income-tax Act, 1961 [Corresponding to section 10(2)(iii) of the Indian Income-tax Act, 1922] - Interest on borrowed capital - Assessment years 1953-54 to 1956-57 - Whether clause (iii) of section 10(i) of 1922 Act does make no destination between capital borrowed in order to acquire a revenue asset and amount borrowed to acquire a capital asset - Held, yes - Whether it does not say that borrowing of capital should have been necessary for purpose of business and that if at time of borrowing assessee had sufficient money of his own to invest in business than deduction cannot be allowed - Held, yes - On partition of family assessee was directed by court to pay his brother for acquiring brother's interest in family business - Capital was borrowed for making payment and interest was also paid on borrowed capital - Whether payment of interest could not be berated as capital expenditure and it was to be allowed as deduction - Held, yes Section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Income escaping assessment - General - Assessment years in 1953-54 and 1954-55 - Assessing Officer allowed interest on borrowed capital - Successor Assessing Officer for assessment year 1955-56 and 1956-57 disallowed said expenditure and reopened assessment for assessment year 1953-54 and 1954-55 on ground that predecessor Assessing Officer had not applied his mind probable because full details about interest was not submitted him - Whether since successor Assessing Officer was not certain about materials which was before his predecessor, and no new information came to possession of successor Assessing Officer, it was to be held that reassessment was above on mere change of opinion on part of Assessing Officer and so, reopening of assessment was not proper - Held, yes FACTS In a partition of a joint family property between the assessee, 'G' who was the proprietor of a firm, and his brother, 'N', 'G' was required to pay 'N' monies lieu of N's share in certain item of property, as will as for the half share of 'N' in said firm, which was allotted to G. In order to make this payment, a loan was taken by 'G'…

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