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TMI Blog1982 (9) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual. Her minor daughters were admitted to the benefits of partnership in two firms. Apart from the share of profits arising to the minors, they had also been paid interest on funds advanced to the firm. The ITO added such interest to the total income of the assessee u/s. 64 (1) (iii). On appeal, the AAC confirmed the addition on the ground that the interest was attributable to the admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from partners or outsiders. In respect of the other minor Banumathi, the benefits of partnership accrued from the firm of M/s Thirumalai Textiles which also provided that the capital contribution of the partners and minors shall not bear any interest. It was pointed out that the interest accrued only in respect of the share of profit lying with the firm. It was submitted that in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital contribution but only from the share of profits and other funds of the minor, which had been deposited with the firms. Therefore, the question is, whether, such interest arising from the deposit of the minor's own funds from a firm, in which they were admitted to the benefits of partnership, could also be regarded as part of the benefits of partnership which could be added u/s. 64(1) (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from an outsider. In the present case, from the facts on record, it is clear that the interest was paid because the firm borrowed funds of the minor and not because the minors were bound to keep their share of profits or their own funds with firm. In the circumstances, the interest accruing from such deposits accrued, because of a normal relationship of creditor and debtor and not because of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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