SMT. G. ANITA vs COMMISSIONER OF Income Tax

Rao, J. -

This application u/s 256(2) of the Income Tax Act, 1961 at the instance of the assessee, seeks reference of the following two questions arising out of the order in R.A. No. 624 (Hyd.) of 1996 :

"1. Whether, on the facts and in the circumstances of the case, is the Tribunal correct in law in confirming the disallowance of Rs. 70,000 out of the interest payments of Rs. 1,43,263, particularly when it was shown that iii the accounting year relevant for the assessment year under reference, there was only an understanding to repay the amount of Rs, 8 lakhs due by the assessee''s husband to Satya Traders ?

Whether, on the facts and in the circumstances of the case, is the Tribunal correct iii law in holding that the assessee employed a device to reduce tax liability merely because the assessee had not adjusted the sum of Rs. 8 lakhs against the loan taken from Balakrishna as individual and his HUF ?"

These questions concern and touch upon [lie disallowance of interest of Rs. 70,000 paid to G. Balakrishna, husband of the assessee. It was claimed that the assessee borrowed funds from him individually and in his capacity as HUF and interest was credited. The assessee claimed that she has taken over the liability of her husband to Satya Traders, of which the assessee is a partner, through a letter authorising to debit her account with them and give credit to her husband. However, the same was rejected consistently holding that the entire set of transaction was a device to reduce tax liability of several taxable entities. In view of the above findings arrived at which touch upon exclusively factual appreciation and no question of law as such is involved or arises, there is no warrant to refer the above questions as contemplated u/s 256(2).

The I.T.C. is, therefore, rejected, No costs.