JUDGMENT B.P. Jeevan Reddy, C.J.
1. Under Section 256(2) of the Income-tax Act, 1961, the Tribunal has referred the following two questions :
"1. Whether, on the facts and circumstances of the case, the Tribunal was legally correct to hold that the amounts borrowed by the assessee during the course of the banking business were not utilised in the construction of properties and, accordingly, the interest payable amounting to Rs. 86,709 was not permissible deduction under Section 24(1)(vi) of the Income-tax Act, 1961, against the income from house properties ?
2. Whether, on the facts and circumstances of the case, the Tribunal was justified in disallowing the sum of Rs. 1,24,849 bring business loss for the year under consideration, the same being composed of the following items.
(a) Interest on decretal amounts.
(b) Interest payable on old deposits.
(c) Litigation expenses incurred during the year under consideration.
(d) Establishment charges.
(e) Other incidental expenses incurred by the interim official receiver as business expenses of the assessee ?"
2. So far as question No. 1 is concerned, the Tribunal has found that there was no evidence to establish a nexus between the borrowings and the acquisition and construction of the properties in question and, therefore, the amount of interest payable on the borrowings was not deductible under Section 24(1)(vi) of the Income-tax Act. We see no reason to doubt or disturb the finding arrived at by the Tribunal. The question is answered in the affirmative, i.e., in favour of the Revenue and against the assessee.
3. So far as question No. 2 is concerned, the finding of the Tribunal is that the assessee was not carrying on banking business at all and if that is so, the several amounts claimed by way of deduction of interest on decretal amounts and old deposits, etc., could not have been deducted as business loss. Since the finding of the Tribunal is one of fact that the assessee was not carrying on banking business, there is no question of deducting the amount as business loss. The question referred is answered in the affirmative, i.e., in favour of the Revenue and against the assessee.