2001 (8) TMI 73

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....and in the circumstances of the case, the Appellate Tribunal was right in law in holding that interest on the two amounts of Rs.95,000 and Rs.96,001 lying in the accounts of the two minors, Shri Roop Kishore and Shri Satish Chand Rastogi, respectively, in the partnership firm of Satish Chand Trilok Chand was not includible in the hands of the assessee under section 64(1)(iii) of the Act of 1961 for the assessment year 1976-77? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in sustaining the inclusion of the interest in the hands of the assessee on the balance amount of Rs.53,237 in the account of Shri Satish Chand Rastogi with the said partnership firm of Harish Chand Trilok Chand ....

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.... ----------------------------------------------------------------------- The assessee's stand before the Income-tax Officer was that since the minors were only admitted to the benefits of partnership on a capital of Rs.5,000 each, only the share income and interest attributable to the capital contributed by the two minors could be assessable in the hands of the assessee under section 64(1)(iii) of the Act. It was also contended that the amount over and above the stipulated capital was entirely independent and was either a loan or credit balance in the current account and no part of the interest relatable to loan or current account could be included in the income of the assessee under section 64(1)(iii) of the Act. The Income-tax Offic....

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....ause it was not required to be done in terms of the deed of partnership. Further, it was noted that had these amounts continued to be with Jogdhian Trilok Chand it would have earned interest which would not attract section 64(1)(iii) of the Act. However, the position was different in respect of the opening credit balance in the accounts of the two minors as on June 22, 1974. The accumulation of capital, profit and interest remaining with the firm is different from the deposits made and the loans advanced. Accordingly, the Tribunal held that the interest on the balance amount of Rs.83,287 and Rs.84,444 was rightly included in the hands of the assessee under section 64(1)(iii) of the Act. The assessee's appeal was partly allowed. Both t....