An Allahabad High Court ruled that interest would be allowed as a deduction even if the same is not actually paid by the assessee.
A person may borrow money for acquisition or construction of house property and for this purpose he is required to make payment of interest on such borrowing. A very important question arises as to whether interest would be allowed as a deduction even if the same is not actually paid by the assessee during the year under consideration. Well this issue has been long settled by the Allahabad High Court in the case of CIT v. Devendra Brothers & Co. 200 ITR 146.
In this case the issue that was answered was whether interest in respect of money borrowed for housing would be deductible on accrual basis specially when the interest was not actually paid during the accounting year. When this issue came up before the Hon