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TMI Blog1984 (9) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Modi and Shri A. C. Modi are the partners of M/s Modi Trading Co. They have deposited Rs. 50,000 each in the assessee-firm. The assessee-firm paid interest on the moneys deposited by them in the firm in their individual capacities. The ITO allowed interest paid on the deposits made by the partners of the firm. 3. The CIT found that the order of the ITO is erroneous inasmuch as it is prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dras High Court in the case of Venkatesh Emporium vs. CIT (1982) 137 ITR 593 (Mad) and T. M. N. M. Somasundara Nadar Sons vs. CIT (1982) 137 ITR (Mad). The CIT has observed that in the cases relied upon by the assessee firm. The assessee s representative has accepted the proposition that the HUF cannot become a partner. Consequentially the partnership being agreed upon personally by Shri Rasklal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible deduction under s. 40(b) of the Act. 6. the CIT has distinguished the judgment of the Madras High Court reported in (1982) 137 ITR 593 (Mad) and (1982) 137 ITR 815 (Mad). He has followed the judgment of the Allahabad High Court in the case of CIT vs. London machinery Co. (1979) 10 CTR (All) 301 : (1979) 117 ITR 111 (All). 7. The Supreme Court has dismissed the Special Leave Petition by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 (Bom), wherein the Bombay High Court has held that if an HUF through its manager is a partner of the firm them for the purpose of IT Act the interest received will be income of the HUF; while if any coparcener including manager has advanced a personal loan, the interest paid in respect of personal loan cannot be treated as interest paid tot he HUF which is a partner through the manager. The Kart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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