1978 (1) TMI 10

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... assessee is one M/s. Terla Veeraiah and the assessment year is 1972-73. There was a HUF of which Terla Parasuramulu, the father of Terla Veeraiah, was the karta. The HUF was carrying on wholesale business in cloth. There was a partition between Terla Parasuramulu, his son, Terla Veeraiah, and his grandson, Terla Srisailam. After partition, the three divided members constituted themselves into a partnership firm by a deed dated December 12, 1962. Parasuramulu died on January 9, 1969. The partnership continued even after his death. Parasuramulu did not leave any other person except his son, Veeraiah, as his heir. He, therefore, succeeded to Parasuramulu's properties including the capital standing to his credit in the firm. Veeraiah was being....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....reference has been made to this court. Mr. Anjaneyulu, the learned counsel appearing for the assessee, invited our attention to the findings of the Tribunal to contend that on those findings the Tribunal was in error in holding that s. 40(b) comes into operation. Section 40(b) of the I.T. Act says : " Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head ' Profits and gains of business or profession',--...... (b) in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm." It is Mr. Anjaneyulu's case that the payment of interest of Rs. 7,890 was not to....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The relevant portion of the decision of the Tribunal (para. 7) which deals with the question may be extracted with advantage. " On the above findings, the question that still remains to be considered is whether section 40(b) would be applied. We do not think that there can be any scope for the argument that the section would not be applied. We have already indicated that Terla Veeraiah as a partner was having his account under the style as 'Terla Veeraiah Hindu undivided family Account'. In respect of properties inherited by Terla Veeraiah from his father, also we think as per our conclusion, the same must belong to Terla Veeraiah as Hindu undivided family. Therefore, the interest was paid to Terla Veeraiah in the capacity of karta rep....