Deduction of interest – allegation that assessee had lent money from borrowed funds to the husband – principles of commercial expediency – CIT(A) decided the case against the assessee based on its own personal opinion without any material available on record thus the finding rendered by the CIT(A) is perverse. – HC

Deduction of interest – allegation that assessee had lent money from borrowed funds to the husband – principles of commercial expediency – diversion of funds – HELD THAT:- No allegation against the assessee of diversion of funds, considering the relationship between the assessee and her husband, who had established the dhall mill and that the assessee is at an advantage in obtaining finished product from her husband’s dhall mill and she will be assured of time delivery of the processed dhall and assured of quality processing and obviously at discounted rates.

There is no endeavour made by the Tribunal to examine the specific stand of the assessee that the assessee had interest free funds.

CIT(A) decided the case against the assessee based on its own personal opinion without any material available on record thus the finding rendered by the CIT(A) is perverse. This perverse finding affirmed by the Tribunal was without any material placed before it to come to a conclusion that the role played by the assessee’s husband as a miller is virtually insignificant.

Decisions have to be taken based on the return of income filed by the assessee and the documents that may be called for by the Assessing Officer. There is no room for the authority to incorporate their personal opinion while completing the assessment, which precisely was done by the CIT(A) and therefore, has to necessarily held to be perverse and unsustainable.

Assessee’s husband stood as a guarantor to the assessee for obtaining cash credit facility was not disbelieved. CIT(A) rejects it by stating that the value of the property was not equal to that of the amount borrowed. This is not the concern of the CIT(A), it is for the bank, which extended the loan to be worried about the adequacy of the security offered by the borrower. In any event, the assessee’s husband stood as a guarantor for the loan transaction making him jointly and severally liable along with the assessee. – Decided in favour of assessee

MADRAS HIGH COURT

SMT. R. SANTHA VERSUS COMMISSIONER OF INCOME TAX -VII

Tax Case Appeal No. 253 of 2009