https://www.taxtmi.com/caselaws?id=25993 For disallowance under section 40(b) of the Income-tax Act, interest attributable to a partner is to be computed on the net amount actually payable, not on gross figures split across separate ledger accounts. Where a partner has both interest credited on funds lent to the firm and interest debited on borrowings from the firm, the substantive tax effect depends on the net interest balance. The accounting presentation cannot change that substance, and the CBDT circular recognised the same approach. On that basis, the disallowance was confined to the net interest amount rather than the gross sum. en-us Wed, 11 Jun 1986 00:00:00 +0530 Tue, 02 Feb 2010 11:41:15 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=25993 For disallowance under section 40(b) of the Income-tax Act, interest attributable to a partner is to be computed on the net amount actually payable, not on gross figures split across separate ledger accounts. Where a partner has both interest credited on funds lent to the firm and interest debited on borrowings from the firm, the substantive tax effect depends on the net interest balance. The accounting presentation cannot change that substance, and the CBDT circular recognised the same approach. On that basis, the disallowance was confined to the net interest amount rather than the gross sum. Case-Laws Income Tax Wed, 11 Jun 1986 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=25993