9911796707
TMI Blog1991 (7) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... on question which arises for decision in these appeals by special leave is whether the interest paid on the debit balance of Rs. 1,75,310 taken over by the assessee-firm from the erstwhile Hindu undivided family, would be an allowable deduction under section 36(1)(iii) of the Income-tax Act, 1922. The partners of the firm were members of the Hindu undivided family which carried on business at Varanasi in the name of Badal Ram Laxmi Narain. The family had no capital of its own and had been running the business with the help of borrowed money. On October 20, 1951, there was a partial partition in the family. As a result thereof, the business of the family was partitioned between the members of the family. The members formed themselves into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the assessee was entitled to the deduction of interest on the debit balance of Rs. 1,75,310 taken over from the erstwhile Hindu undivided family ?" The High Court examined the facts of the case to find out whether there was any sale of the goodwill. It observed that the goodwill of the Hindu undivided family business was never sold or purchased. Had there been any such transaction, appropriate entries in the books of account of the Hindu undivided family would have been made. The Hindu undivided family should have credited the amount in its account in respect of the price paid for the goodwill and since there were no such entries, there could not be any inference that the firm has taken over the liability of Rs. 1,75,310 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al that the firm has taken over the debit balance of Rs. 1,75,310 in consideration of the sale of the goodwill, in the premises, stands to reason. Indeed, it seems to be neither unreasonable or unwarranted, nor arbitrary or unjust. The High Court ought not to interfere with such conclusion even if another view is possible. The second reason given by the High Court is also not acceptable. We are concerned with the rights of the assessee and not the liability of the individual members of the Hindu undivided family. The claim of the assessee for allowable deduction of the interest paid cannot be defeated by the existence of personal liability of the members of the Hindu undivided family. That is wholly beside the point. We are, therefore, un ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
