5.5 lacs was deductible for the assessment years 1957 58, 1958 59 and 1959 60, the Tribunal declined to make any reference to the High Court, whereupon the assessee applied to the High Court under s. 66 2 and upon the application being allowed, the Tribunal referred the question whether interest on the overdraft of Rs.
775 of 1970 .
As regards interest on Rs.
15,06,891.
At the close of the said accounting year i.e. on 1 11 1956 after debiting the aforesaid sum of Rs.
342 of 1964 .
As regards interest on the remaining sum of Rs.
4.5 lacs which was left as a loan with the assessee that was debited to her account, the assessee urged that she was also entitled to claim the same as a permissible deduction the claim in respect thereof, however, was made for the assessment years 1958 59 and 1959 60.
Appeals by Special Leave from the Judgment and Order dated 22 9 1971 of the Allahabad High Court in I.T. References Nos.
25,470 for the assessment year 1958 59 and Rs.
5.5 lacs by depositing the same in a joint account opened in the names of the District Magistrate, Bulandshahr and Smt.
5.5 lacs paid to the Engineering College on January 7, 1956.
In the assessment proceedings for the assessment years 1957 58, 1958 59 and 1959 60 the assessee claimed the deduction of three sums Rs.
Initially on November 21, 1955, a sum of Rs.
The assessee preferred appeals to the Appellate Tribunal.
In support of these submissions a certificate issued by the District Magistrate, Bulandshahr dated October 17, 1958 was produced before the Tribunal.
At the beginning of the accounting year the amount outstanding in the overdraft was Rs.
1.5 lacs was to include the total interest that was to accrue on the sum of Rs.
In pursuance of the promise made on October 21, 1955 she actually made over a sum of Rs.
4.5 lacs claimed for the assessment years 1958 59 and 1959 60, the Tribunal itself made a reference to the High Court under s. 66 1 and referred for the opinion of the High Court the question whether in the facts and circumstances of the case the interest credited by the assessee to the account of Ganga Sagar Jatia Engineering College on the sum of Rs.
10 lacs the capital account showed a net credit balance of Rs.
In regard to this overdraft account the Tribunal has numbered that at the beginning of the accounting year the amount outstanding in the said over draft was Rs.
5.5 lacs during the Samvat years relevant to the said assessment years.
20,107 for the assessment year 1957 58 , Rs.
23,80,753.
9,55,660 among the further debits to this account during the year was said sum of Rs.
Meanwhile, Smt.
Indermani Jatia died and her legal heir Madhav Prasad Jatia was substituted in the proceedings.
4.5 lacs was left with the assessee and was treated as a debt to the Institution and interest thereon at 6 per annum with effect from October 21, 1955 was to be finally deposited in the Technical Institute account.
The High Court heard and disposed of both the references by a companymon judgment dated September 22, 1971.
She also promised a further sum of Rs.
These facts become clear from a certificate dated October 17, 1958, issued by the District Magistrate, Bulandshahr which was produced before the Appellate Tribunal.
10 lacs earlier donated to the companylege.
4.5 lacs was, as stated earlier, treated as a debt due by her to the Institute and accordingly she was debited with interest thereon at 6 per annum with effect from October 21, 1955.
25,470/ and Rs.
The aforesaid transaction came to be recorded in the books of the assessee as follows At the beginning of the accounting year Samvat year 2012 13 accounting period 13 11 1955 to 1 11 1956 relevant to the assessment year 1957 58 the capital account of the assessee showed a net credit balance of Rs.
18,445/ being the respective items of interest paid by her to the bank on Rs.
The assessee companytended that she had preferred to draw on the overdraft account of the bank for the purpose of paying the institution in order to save her income earning assets, namely, the shares, which she would have otherwise been required to dispose of and, therefore, the interest paid by her should be allowed.
5.5 lacs to the institution on January 7, 1956 from the overdraft account which she had with the Central Bank of India Ltd., Aligarh.
4.5 lacs in favour of the Engineering College, the Appellate Tribunal held that numberdonation of that sum had been made by the assessee, that it was at best a promise by the assessee to the District Magistrate to pay that amount for purpose of charity and the mere entries in the assessees own account book crediting the trust, which had yet to companye into existence, would number amount to a gift or charity for a trust and as such the interest credited to the account of the Engineering College was also disallowed.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
20,107/ , Rs.
4.5 lacs that was debited to her account and credited to the Institutes account it was urged that this balance amount was kept in trust for the institution and hence the accruing interest thereon which was debited to her account should be allowed as a deduction.
So also the claim for deduction of interest credited to the companylege account on Rs.
1831 1833 of 1972.
On the question whether the interest on Rs.
4.5 lacs was disallowed.
The said payment was made by the assessee by drawing a cheque on the overdraft account which she had with the Central Bank of Indian Ltd., Aligarh.
10 lacs was debited to her capital account and companyresponding credit was given to the account of the said Institute.
Indermani Jatia for the companylege while the balance of Rs.
10 lacs to the Engineering College on October 21, 1955, that the obligation to pay the said amount arose on November 21, 1955 when the amount was debited to her capital account and the companyresponding credit was given to the account of the institution, and that out of this total donation a sum of Rs.5.5 lacs was actually deposited in the joint account of the assessee and the District Magistrate, Bulandshahr on January 7, 1956 for which the overdraft with the Central Bank was operated and hence the interest was deductible as business expenditure.
As regards the deduction of interest on Rs.
4.5 lacs and accretion thereto was an admissible deduction for each of the said two years being Income Tax Reference No.
Thereafter, during the same year of account the assessee actually paid only a sum of Rs.
The balance of the promised donation, namely, Rs.
C. Manchanda and Mrs. Urmila Kapoor for the Appellant.
5.5 lacs to the bank, the taxing authorities took the view that said claim for deduction was number admissible either against business income under s. 10 2 or against income from investments under s. 12 2 of the Indian Income Tax Act, 1922.
As regards the three sums paid by way of interest on Rs.
2,76,965 further overdrafts were raised during the accounting year with the result that at the end of the year the liability of the assessee to the bank was Rs.
5.5 lacs the sums of Rs.
1.5 lacs for the companystruction of a Female Hospital at Khurja but this subsequent donation of Rs.
With a view to companymemorate the memory of her deceased husband, on October 21, 1955 she promised a donation of Rs.
The Judgment of the Court was delivered by TULZAPURKAR, J. The assessee, Smt.
As regards the interest accruing on the sum of Rs.
However, the capital, assets and income in respect of different sources of income were incorporated in one companymon set of books.
S. Desai and Miss A. Subhashini for the Respondent.
18,445 for the assessment year 1959 60 paid to the Central Bank was allowable as a deduction under s. 10 2 iii or 10 2 xv of the Indian Income Tax Act, 1922 being Income Tax Reference No.
Indermani Jatia, widow of Seth Ganga Sagar Jatia of Khurja, carried on money lending and other businesses and derived income from various sources such as investment in shares, properties and businesses.
775/70 and 342/64.
10 lacs for setting up an Engineering College at Khurja to be named Seth Ganga Sagar Jatia Electrical Engineering Institute Khurja.
