1984 (5) TMI 102 - AT - Income Tax

Summary

The Revenue filed an appeal against the order of the AAC regarding interest paid by a registered firm to an individual representing his HUF. The Allahabad High Court held that interest paid to a partner, even in a representative capacity, is disallowed under section 40(b). However, the Bombay High Court ruled that interest on a personal loan to a partner representing his HUF is not disallowed under section 40(b). The Tribunal followed the Bombay High Court's view, holding that the interest paid to the individual representing the HUF could not be disallowed under section 40(b) as it was not paid to the HUF. The appeal was dismissed.