TaxTMI 
TaxTMI 
1979 (9) TMI 49
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....-tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following three questions for the opinion of this court : " 1. Whether it was a mistake to set off the interest received by the firm from Shri Mahabir Prasad Juthalal against the interest paid to the other partners for working out the amount to be disallowed u/s. 40(b) of the Income-tax Act? 2. If the answer to the above q....
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....n that year, the assessee had realised Rs. 30,814 as interest from Mahabir Prasad Juthalal, the fourth partner. Subsequently, he revised the assessment under s. 154 and reduced the addition by the amount of Rs. 30,814, being the interest realised by the firm from Mahabir Prasad Juthalal. As a result, the net amount of addition on account of the interest paid to the partners worked out at Rs. 2,042....
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....In this context, it was urged that as the firm was only a collective name for all its partners and the assessee-firm could not receive income from its partners. The ITO, however, repelled these contentions and rectified the order. Appeals before the AAC and the Tribunal have failed. Coming to the first question, a bare perusal of s. 40(b) indicates that interest paid by the firm to its partners....
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.... adjustment of the amount of interest received from a partner against interest paid to other partners, the ITO rightly added the amount of interest paid to the three partners without adjusting the amount of interest received from the fourth partner. Counsel for the assessee urged that inasmuch as this court in Sri Ram Mahadeo Prasad [1953] 24 ITR 176 (All) has laid down that the amount of inter....