P. RM. S. RAMANATHAN CHETTIAR vs COMMISSIONER OF INCOME-TAX, — 1972 PTD 422

Citation: 1972 PTD 422

Court: Madras High Court

Year: 1971

Decision Date: 1971-12-31

Parties: P. RM. S. RAMANATHAN CHETTIAR vs COMMISSIONER OF INCOME-TAX, JUDGMENT

Headnotes

Case cited as 1972 PTD 422

Judgment Text

Court Name: Madras High Court Judge(s): A. Alagiriswa mi, K. Veeraswa mi Title:P. RM. S. RAMANATHAN CHETTIAR vs COMMISSIONER OF INCOME-TAX, JUDGMENT Reported As: 1972 PTD 422 Result: question allow Judgment JUDGMENT VEERASWAMI, J.-This reference relates to the propriety of disallowance of an exnen1iture incurred in the form of interest paid on borrowing. The assessment year is 1961-62. The assessee during that year carried on money-lending business and in addition received income from the firms of partnership. He was a partner in Mappadam Rubber Estate, an agricultural estate in which he had invested Rs. 1,00,000 towards his share capital. Likewise, he had also invested in Nathan Muthu Thalanar Estate, a forest taken for clearing and cultivation of paddy. Etc,, a sum of Rs. 2,25,000 towards his half share of the capital in a firm of partners of which the assessee was one. He returned an income of Rs. 7,661 from his money-lending business but this was arrived at after deducting a sum of Rs. 20,700 by way of interest paid on borrowed money. The Income-tax Officer disallowed a sum of Rs. 5,321 as referable to a sum of Rs. 2,16,742 which constituted the assessee's share of the capital in Nathan Muthu Thalanar Estate. This was on the ground that this expenditure by way of interest was not wholly and exclusively laid out for the sake of the assessee's business. He reasoned that, as there was no income from this particular investment in the firm which could be considered for the…

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