9911796707
TMI Blog1983 (8) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... etimes they were overdrawn. Interest was charged either ways-interest was credited when there was a credit balance and interest was debited when there was a debit balance. The position in relation to the four assessment year under consideration is as under: Assessment year Gross interest paid to the partners Interest received from the partner Net interest paid to the partners 1974-75 74,611 39,430 35,181 1975-76 1,18,387 67,240 51,147 1976-77 87,476 7,423 80,053 1977-78 89,277 9,155 80,122 In the original assessment proceedings for the asst. yrs. 1974-75 and 1975-76, the ITO proceeded to disallow u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid appeal, held the issue in favour of the assessee. It is submitted on behalf of the assessee that for the asst. yr. 1974-75 also the Tribunal by their order dt. 4th Dec., 1979 in ITA No. 2670 (Bom)/78-79 decided the issue in favour of the assessee by an action u/s 154 of the IT Act on behalf of the ITO. On behalf of the revenue, our attention is invited to the order of the ld. Accountant Member dt. 4th Dec., 1979 in ITA No. 2670 (Bom)/78-79 for the asst. yr. 1974-75 wherein the ld. Accountant Member has clearly observed that such an action could not be taken u/s 154 of the IT Act by the ITO. On merits, however, the ld. Accountant Member was justified in the light of the Andhra Pradesh High Court decision in (1972) 83 ITR 579 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged interest as indicated in the same table. The question before us is whether it is the net interest paid to a partner which was taxable u/s 40(b) of the IT Act or the gross interest without making adjustment for interest charged to the partner on an overdrawn account during the course of the year. On this issue, we have a clear and unambiguous order of the Tribunal in the assessee s own case dt. 23rd Oct., 1979 for the asst. yr. 1973-74 referred to above to the effect that the Tribunal clearly accepted the contention of the assessee that in the case of one and the same partner the amount of interest due to him or payable by him should only be ascertained after the adjustment of the balance of all accounts in his name at the head offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chhotalal Keshavaram vs. CIT 1978 CTR (MP) 118 : (1978) 115 ITR 347 (MP) also does not support the plea on behalf of the revenue in the present case. In this case also clearly the account of the partner Amritlal Sonaben showed a credit balance whereas the account of the partners Ghanshyamdas Chotalal and Rameshchandra Chotalal showed debit balances. This was clearly a case of set off of receipt of interest from one partner against the payment of interest to another partner. 5. In our opinion, none of the three cases relied upon by the ld. Accountant Member in the opinion expressed by him support the plea of the revenue that in the case of the one and the same partner, whose some account showed a credit whereas some other account showed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments were reopened by the ITO on receipt of an audit objection. The internal audit party of the income-tax department had raised an objection regarding the allowance of the interest paid to M/s Sepulchre Bros. (India) Ltd. not being properly disallowed u/s 40(b) of the IT Act. The audit party had pointed out the Board s Circular No. 228(Bom)/75-ITA-II dt. 25th Sep., 1975 as being relevant. The assessee objected to the reopening on the basis of the Supreme Court decision in the case of Indian Eastern Newspapers Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC). The CIT (A), however, did not accept this contention of the assessee and rejected the same. The CIT (A) upheld the assessments made by the ITO u/s 147(b) of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
