Tax deduction for provision to ex-partner's right fails where no crystallised liability or actual use of the right is shown.

A provision debited for alleged use of an ex-partner's right was not allowable as a tax deduction because, on the facts found, the firm had not used any such right during the relevant year and no credit balance stood in the ex-partner's favour. The claim of diversion by overriding title under section 37 of the Partnership Act was rejected as misconceived, and the liability had not crystallised so as to support deduction. The disallowance was therefore upheld against the assessee by the HC.

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Issues: Whether the amount of Rs. 5,582 debited as a provision for use of the right of the ex-partner was an allowable deduction under the tax law.

Analysis: The claim failed because, on the facts found, the firm had not used any right of the ex-partner during the relevant year and there was no credit balance in her favour. The asserted diversion by overriding title under section 37 of the Partnership Act was therefore misconceived, and the liability had not crystallised so as to justify the deduction.

Conclusion: The amount was not an allowable deduction and the disallowance was upheld, against the assessee.

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