https://www.taxtmi.com/caselaws?id=63080 Interest paid directly to the Life Insurance Corporation was not disallowable under section 40(b) of the Income-tax Act, 1961 because the transaction had to be tested by its real character. The assessee recorded the corporation as creditor, the loan funds came from the corporation, and the interest was paid to it directly. The partner merely acted as a conduit in arranging the loan on the security of his policies, so he was not in substance the lender and no interest was paid to a partner. Section 40(b) was therefore not attracted and the proposed disallowance failed. en-us Thu, 16 Feb 1978 00:00:00 +0530 Thu, 27 Jan 2011 17:31:52 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=63080 Interest paid directly to the Life Insurance Corporation was not disallowable under section 40(b) of the Income-tax Act, 1961 because the transaction had to be tested by its real character. The assessee recorded the corporation as creditor, the loan funds came from the corporation, and the interest was paid to it directly. The partner merely acted as a conduit in arranging the loan on the security of his policies, so he was not in substance the lender and no interest was paid to a partner. Section 40(b) was therefore not attracted and the proposed disallowance failed. Case-Laws Income Tax Thu, 16 Feb 1978 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=63080