| Case ID |
466ff9cf-5310-448a-b354-3fb6a697964e |
| Body |
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| Case Number |
IT REFERENCE No. 571 OF 1979 |
| Decision Date |
Jan 06, 1986 |
| Hearing Date |
|
| Decision |
The court held that the Tribunal did not find that any part of the unsecured debentures issued on reduction of share capital was borrowed capital used for acquiring house property as per section 24(1)(vi) of the Income-tax Act, 1961. If it is established that the property was purchased with borrowed capital, then the interest on such capital would be deductible in computing income from house property. The matter was remanded to the ITO for further determination in line with these observations. The reference was returned unanswered, with no order as to costs. |
| Summary |
This case revolves around the interpretation of Section 24(1)(vi) of the Income-tax Act, 1961, focusing on whether interest on unsecured debentures, issued on reduction of share capital and utilized for acquiring house property, is deductible. The assessee claimed that the debentures constituted borrowed capital. The Tribunal's lack of findings on this issue led the High Court to remand the matter for further investigation. The ruling emphasizes the necessity of establishing the nature of the capital used for property acquisition to determine deductibility of interest. This case is significant for tax law practitioners, particularly in capital deduction matters, and underscores the critical interplay between borrowing and property investment. |
| Court |
Calcutta High Court
|
| Entities Involved |
Parakh Kothi Ltd.
|
| Judges |
SATISH CHANDRA, C.J.,
MUKUL GOPAL MUKHERJI, J.
|
| Lawyers |
A.N. Moitra,
B.K. Naha,
S.K. Bagaria
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Parakh Kothi Ltd.
|
| Citations |
1986 SLD 2508 = (1986) 160 ITR 864
|
| Other Citations |
Not available
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
24(1)(vi)
|