1994 (4) TMI 7 - HC - Income Tax

Summary

The High Court of Madhya Pradesh ruled in favor of the assessee regarding the application of section 40(b) to interest paid to kartas of Hindu undivided families who were partners in a firm in their individual capacity. The court held that the interest paid to the sons in their individual capacities was not liable to be deducted from the firm's income under section 40(b) of the Income-tax Act, 1961. The court referred to a previous Full Bench decision and explained that the Explanations to section 40(b) were clarificatory and not mandatory. The court directed the transmission of the order to the Appellate Tribunal with no order as to costs.