1988 (9) TMI 23

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....pital account and to make gift of the same to Miss Anju Mahatta and that the gift was a valid one and the interest payment of Rs. 3,375 and Rs. 4,711 relating to this gifted amount for the assessment years 1970-71 and 1971-72, respectively, was an allowable deduction in the case of the assessee-firm ?" The firm, Mahatta Construction Co., at Ketekibari at Tezpur, is the assessee in this case. The question relates to the assessment years 1970-71 and 1972. Mohanlal Choudhury, a partner of the firm, had a credit balance of Rs. 36,619.82. In the relevant year, the profit to his credit was Rs. 36,619.12. Out of the total amount he had withdrawn Rs. 50,000 and made a gift of the amount to his niece, Anju Mahatta, on July, 19, 1969. The closing ....

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....rovision in the deed that a partner can withdraw money from the capital account. In the absence of any contract, there is no presumption that partner could withdraw the money. Because other partners have withdrawn money, that does not mean there is no prohibition to withdraw the amount. It was on this ground that the Revenue contended that the withdrawal was improper and that the payment of interest to the niece or to the creditor was properly disallowed by the Income-tax Officer. Learned counsel appearing for the assessee argued that this court is to call for findings on these aspects, viz., whether there was an express agreement between the partners to withdraw money, whether Mohanlal Choudhury was contractually obliged to bring in ori....