1983 (12) TMI 77

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.... 2. For the assessment year in question the assessee had paid interest amount of Rs. 1,95,723 to the HUF accounts of the partners. The ITO disallowed the entire amount on the basis of s. 40(b) of the IT Act. The partners to whom this interest was paid represented their respective HUFs as Kartas in the assessee partnership firm. The CIT (Appeals) however allowed the claim of the assessee to the e....

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.... to their HUF accounts. However, in the case of CIT vs. Sajjanraj Divanchand (1981) 21 CTR (Guj) 26 : (1980) 126 ITR 654 (Guj) the Gujarat High Court had laid down the principle that so far as the partnership is concerned only an individual can be a partner and so the interest paid to the HUF would not come within the scope of disallowance u/s 40(b). In the latter case of Divanchand Dilipkumar; I.....