2001 (8) TMI 60

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....ppellate Tribunal, Bench "C" has referred the following two questions under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act"), at the instance of the Revenue: "(i) Whether, the reasoning of the Appellate Tribunal that the disallowance of interest paid on the amounts received from parties other than partners of the firm under section 40(b) of the Income-tax Act, 1....

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....f money received from various persons who were related to the partners. Admittedly, the assessee was not required to return the funds received from such persons and in view of the said fact, the Income-tax Officer treated the said amounts as capital receipts in the hands of the assessee-firm. However, in view of the fact that though these moneys were required to be utilised only for charitable pur....

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....d not claim deduction of any such interest paid. It was further contended that in the absence of two parties who could enter into a contract, it was a case of the firm paying interest to itself and such interest could not be permitted to be allowed as a deductible item against the taxable income of the firm. It was further contended that the funds in question were admittedly received for the purpo....

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.... Tribunal has found as a matter of fact that the Revenue has not doubted the genuineness of the stand taken by the assessee in respect of various accounts bearing the character of public trust. In view of this factual situation, once the Department accepts that the monies lying to the credit of various accounts do not belong either to the firm or to its partners' but belong to a third party and if....