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TMI Blog1972 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the assessee and her minor son. The total share income of the assessee in the partnership was determined at Rs. 39,847 and a similar amount was determined in the case of the assessee's minor son. The son being minor, the minor's share was included in the assessee's income and the total share income from the firm was assessed in the assessee's hands at Rs. 79,694. The assessee claimed deduction of depreciation on the premises in which the hotel is being run and further claimed deduction of the property tax, the two together being Rs. 4,354. The Income-tax Officer disallowed the claim. An appeal to the Appellate Assistant Commissioner was dismissed. On further appeal, the Income-tax Appellate Tribunal held that the assessee was entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head " Profits and gains of business or profession ". The corresponding provisions under the Indian Income-tax Act of 1922 were sections 10(2)(vi) and 10(2)(xv), respectively. In Commissioner of Income-tax v. Parvathaneni Chandrasekhara Rao, it was held that a partner of a registered firm is entitled to claim under section 10(2)(iii) of the Income-tax Act deduction of interest paid by him on the capital borrowed for the purposes of the partnership from his share of the profits of the partnership. It was held that the Act contemplates computation of the income of an individual only after allowing the justifiable deduction, i.e., expenses incurred for the purpose of earning that income. In that case it was also held that in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions similar to sections 10(2)(vi) and 10(2)(xv) of the Indian Income-tax Act, 1922, there is a special provision, namely, section 67, which deals with the method of computing a partner's share in the income of the firm. Under section 67(3) it is provided that any " interest paid by a partner on capital borrowed by him for the purposes of investment in the firm shall, in computing his income chargeable under the head 'Profits and gains of business or profession' in respect of his share in the income of the firm, be deducted from the share ". He argued that the sub-section is exhaustive of the permissible deductions in comptuting a partner's share in the income of the firm, and except the interest paid by the partner on the capital borro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69(3) which was as follows : " Any interest paid by a partner on capital borrowed for the purposes of investment as his capital in the firm shall, in computing his income chargeable under the head 'Profits and gains of business, profession or vocation' in respect of his share in the income of the firm, be deducted from the share, but no other deduction shall be allowed in respect of the said share." Thus, it was provided expressly that no decluction other than what was mentioned in the sub-clause should be allowed. Even when the original Bill was introduced in Parliament on April 24, 1961, clause 67(3) was in the same terms as clause 69(3) of the Report, but when the Bill passed through the Select Committee stage the words " no other dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including depreciation could be deducted in computing the share income from a partnership as it was related to partners carrying on business of the firm. It was observed that section 37 of the Act is in the same terms as the provisions contained in section 10(2)(xv) of the Act of 1922 and the decisions on section 10(2)(xv) of the Act of 1922 have a direct bearing on the interpretation of section 37(1) of the Act. It is true, however, that there is no discussion on the question whether section 67(3) of the new Act is exhaustive. For the aforsaid reasons we answer the question referred to us for decision as follows: On the facts and in the circumstances of the case, in computing the assessee's share of profit from the firm, New Taj Mahal Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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