2002 (1) TMI 19 - HC - Income Tax

Cash Credits, Business Expenditure, Firm, Disallowance - (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the cash credit of Rs.10,000 in the name of Shri Phool Chand Jain and interest of Rs.900 thereon? - (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the interest of Rs.5,851 disallowed by the Income-tax Officer as interest paid to partners? - the answer to the questions is in the affirmative, i.e., in favour of the assessee and against the Revenue.

Summary

The High Court of Rajasthan ruled in favor of the assessee in a case involving cash credit and interest payments. The Tribunal's decision to delete the cash credit of Rs.10,000 and interest of Rs.900 was upheld as the creditor's identity was established. The Tribunal also found that interest payment to a non-partner cannot be treated as payment to a partner, resulting in the deletion of disallowed interest of Rs.5,851. The judgment favored the assessee and the reference was made accordingly.