TaxTMI 
TaxTMI 
1989 (3) TMI 91
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.... the assessee paid interest to them on their individual accounts totalling Rs. 12,840. Before the Income-tax Officer, the assessee claimed deduction of the interest paid but the Incometax Officer disallowed the same on the ground that it was hit by the provisions of section 40(b) of the Income-tax Act, 1961 (hereinafter called "the Act"), because the representative capacity of the partners could not be taken note of and the interest paid would be considered as having been paid to the partners. The Appellate Assistant Commissioner agreed with the Income-tax Officer and so also the Tribunal. On the aforesaid facts, the Income-tax Appellate Tribunal, Chandigarh, has referred the following question for our opinion. "Whether, on the facts and c....
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....out the legislative intention more clearly so that further controversy and litigation regarding the true intent and purport of these provisions is avoided. To illustrate:... (b) It has also been clarified that where a person is a partner in his representative capacity, interest paid to him in his individual capacity will not be disallowed under the abovementioned provisions and vice versa." It is not disputed, in view of the authoritative decision of the Supreme Court, that such like circulars are binding on the Department and the assessees are entitled to take the benefit of the same. A reading of para 2 shows that by the amendment, the Legislature intended to state the law more clearly (underlined to put emphasis) so that further contro....
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....iew of the circular issued by the Central Board of Direct Taxes, the decisions of the High Courts, which are in consonance with the amended provision, were accepted so that the provision, as it existed before the amendment, was to be read in the light of the amended provision. Similar view has been taken by a Full Bench of the Madhya Pradesh High Court in CIT v. Narbharam Pop at bhai and Sons [1987] 166 ITR 534, and we fully agree with the same. A Full Bench of the Gujarat High Court in Chhotalal and Co. v. CIT [1984] 150 ITR 276, has also taken the same view without the aid of the circular issued by the Central Board of Direct Taxes. Decisions of High Courts of Andhra Pradesh, Bombay, Madras and Rajasthan, were also cited before us, takin....