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TMI Blog2000 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... as referred the following question stated to be of law and to arise out of its order dated November 23, 1979, passed in ITA No. 2156 (Delhi) of 1978-79 for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the addition of Rs. 9,616 was rightly made by the Income-tax Officer in determining the total income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Sri Ram Mahadeo Prasad v. CIT [1953] 24 ITR 176. There were several partners in the firm to whom interest was paid. Interest was also received from some of them. In so far as the partners to whom interest has been paid as well as interest has been received from them, the Tribunal held that only the net interest paid would be added back under section 40(b) of the Act. The sum of Rs. 9,616 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's income liable to tax and that a disallowance under section 10(4)(b) of the Indian Income-tax Act, 1922, of the excess of interest paid to a partner was justified. This view was repeated in Sri Ram Mahadeo Prasad v. CIT [1979] 120 ITR 149 (All). In CIT v. Kailash Motors [1982] 134 ITR 312 (All) also it was held that only the net amount paid by the firm to a partner after adjusting the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the view taken by this court in the aforesaid case that interest received by a firm from a partner is its income. The Supreme Court observed that where two or more transactions on which the interest is paid to, or received from, the partner by the firm are shown to have the element of mutuality and are referable to the funds of the partnership as such, there is no reason why section 40(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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