Reckitt and Colman of India Ltd. vs Commissioner of Income Tax

Sabyasachi Mukharji, J.—It appears that in this reference in respect of the relevant year the profits of the company before payment of taxes as per the profit and loss account was Rs. 1,06,62,415. The income returned by the assessee was Rs. 1,06,80,025. The income assessed by the ITO as per the assessment order appearing in the paper book was Rs. 1,08,05,310. The taxes that were paid by the assessee for the year were Rs. 73,32,054. The month-wise break-up appears to be as follows :

Month Trading receipts deposited in the bank overdraft account as per assessment order Taxes paid from the bank over draft account as per assessment order

(1) (2) (3)

Rs. Rs.

November 1969 39,18,588 8,42,865

December 1969 29,56,976 14,52,504

January 1970 46,70,075 40,931

February 1970 67,68,610 6,991

1,49,282

3,62,506

June 1970 57,57,362 10,50,210

3,92,185

September 1970 41,04,825 19,49,895

10,75,662

October 1970 59,62,251

9,023

3,41,38,681

73,32,054

In the background of these facts which will appear from the order of the ITO in the instant reference for the assessment year 1971-72, it appears to us that, in view of the principles enunciated by us in I.T. Ref. No. 438 of 1975 ( Woolcombers of India Ltd. Vs. Commissioner of Income Tax (Central), ), the question referred to this court, which is as follows : -

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the proportionate interest paid by the applicant on the amount utilised for payment of taxes out of the overdraft account is not an allowable deduction ?"

must be answered in the negative and in favour of the assessee.

In the facts and circumstances of the case, the parties will pay and bear their own costs.

Sudhindra Mohan Guha, J.

I agree.