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TMI Blog2008 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... When the object of the firm was to carry on business and incidentally in any one of the assessment year if the firm had advanced loan to its partners without carrying on any business, it could not be said to be contrary to the aim and object of the firm. All the authorities below had rightly refused to apply the principles of mutuality as claimed by the assessee. - 600 and 601 of 2004 - - - Dated:- 28-7-2008 - K. L. MANJUNATH and B. V. NAGARATHNA JJ. S. Parthasarathi for the appellant. M. V. Seshachala for the respondent. JUDGMENT The judgment of the court was delivered by 1. K. L. MANJUNATH J .- These two appeals arc filed by the assessee Challenging the concurrent findings of the order passed by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26, 1999 and rejecting the contention of the assessee about the principles of mutuality, called upon the assessee to pay tax. 3. Contending that the assessee has not carried on any business in terms of the partnership deed, loans were advanced to the partners alone and interest received by the firm from its partners cannot be assessed to tax by applying the principles of mutuality, an appeal was filed before the Commissioner of Income-tax (Appeals), which appeal came to be dismissed on the ground that either the case in CIT v. Bankipur Club Ltd. [1997] 226 ITR 97 (SC) or the case of CIT Natraj Finance Corporation [1988] 169 ITR 732 (AP) have no application to the facts of the case, the Commissioner of Income-tax (Appeals) di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 (SC) have no application to the facts of this case. In Bankipur Club Ltd.'s case [1997] 226 ITR 97 (SC) the benefit was extended only to its members and not for third parties. Therefore, the said decision cannot be made applicable to the facts of this case. Nataraj Finance Corporation was a firm incorporated only to carry on business in money-lending only for the benefit of its partners and the partnership firm was established only to lend loan to its partners and not to any other persons. Therefore, in the said back ground, the Andhra Pradesh High Court has taken a view that the assessee M/s. Nataraj Finance Corporation is actually not a firm but it is an association of persons created for mutual benefit. But, in the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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