1986 (9) TMI 15 - HC - Income Tax

Summary

The High Court of Karnataka ruled that interest paid to partners cannot be deducted while computing capital gains under section 48(ii) of the Income-tax Act, 1961. The court rejected the argument that interest on capital should be considered part of the cost of acquisition of the asset. The court emphasized that the right to receive interest on capital under partnership terms does not warrant its deduction for capital gains calculation. The decision was against the assessee.