1999 (7) TMI 64

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....d to Shri Deepak N. Shah as partner of the firm representing his Hindu undivided family is not payment made to partner of the firm and consequently cannot be disallowed under section 40(b) of the Income-tax Act, 1961?" The facts, which are material for the purpose of this reference are as under : In the assessee-firm, there are two partners, namely, Hindu undivided families of Narottamdas K. Shah and Smt. Jayalaxmi N. Shah and the Hindu undivided families of Deepak N. Shah. During the previous year relevant to the assessment year 1979-80, the assessee paid commission of Rs. 14,948 and interest of Rs. 55,740 to Shri Deepak N. Shah in his individual capacity. The said amount was credited in the individual account of Shri Deepak Shah. Th....

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....Mangilal (No. 1) v. CIT [1982] 138 ITR 343. In further appeal carried to the Income-tax Appellate Tribunal (the "Tribunal"), the Tribunal was of the view that the issue had to be decided in favour of the assessee and against the Revenue in view of the decision of this court in CIT v. Pannalal Hiralal and Co. [1984] 146 ITR 549. It is observed by the Tribunal that two partners of the assessee-firm are the two Hindu undivided families and there is no dispute that the commission of Rs. 14,948 had been paid to Shri Deepak Shah in his individual capacity and that the interest of Rs. 55,740 had been paid on the individual account of Shri Deepak Shah. The Tribunal, therefore, deleted the addition of Rs. 70,688 made by the Income-tax Officer. He....