1999 (9) TMI 17

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Tribunal, New Delhi, has in compliance with the direction of this court in ITA No. 162 of 1980 under section 256(2) of the Income-tax Act, 1961, referred the following questions for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the disallowance of the sum of Rs. 12,244 being payment of interest to Ma....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hri Mahindra Kumar, Shyam Lal and Smt. Sewati Devi. Smt. Sewati Devi is the mother and Shyam Lal and Mahindra Kumar are her sons. Shri Mahindra Kumar was a partner in the assessee-firm as a karta of his Hindu undivided family styled as Mahindra Kumar Sewati Devi. Similarly, Shri Shyam Lal joined as a partner as karta of his smaller-Hindu undivided family. They had originally formed a bigger-Hindu ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....im in view of the provisions of section 40(b) of the Act. In the assessment year 1973-74, on a similar ground the assessee's claim for payment of interest of Rs. 12,244 to Mahindra Kumar Sewati Devi was disallowed under section 40(b). Under section 40(b)(iv) interest paid to a partner of the firm is not allowable as an expenditure. In the present case, the Hindu undivided families styled as Mah....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... paid. Therefore, section 40(b) was clearly attracted to the facts of the case and the Tribunal was wrong in deleting the disallowance of interest paid to the partners, i.e., Hindu undivided families in question. We find support from an observation of the Supreme Court in Brij Mohan Das Laxman Das v. CIT [1997] 223 ITR 825 The identity of the partners and the persons receiving the interest being t....