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TMI Blog1998 (1) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the sum of Rs. 9,063 being the interest paid by the assessee-firm to Shri Shantharam could not be disallowed under section 40(b) of the Act as the partner had obtained loan from Egmore Benefit Society for the purpose of the assessee-firm and in reality the payment was made only to Egmore Benefit Society ? The assessee is a firm carrying on business in textiles. In the assessment completed for the assessment year 1979-80 the Income-tax Officer held that for the purpose of applying the provisions of section 40(b) of the Income-tax Act 1961 (hereinafter to be referred to as "the Act") only the gross interest should be taken into account and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 9,063 paid by the assessee to its partner was really an amount to the Egmore Benefit Society paid through its partner since he had obtained a loan on his individual responsibility and furnished the security of his own property. The Tribunal therefore recorded a finding that if the interest on the loan is to be excluded from consideration then there would be no amount of interest disallowable under section 40(b) of the Act. The Tribunal further held that having regard to the scope of the appeal before the Tribunal and the fact that the Tribunal cannot grant a greater relief than that claimed by the assessee the Tribunal was of the view that the amount disallowable should be restricted to Rs. 4,369 as claimed by the assessee. The Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal we are of the opinion it is not necessary for us to consider the question whether the interest paid by the firm to the partner was really the interest paid to the Egmore Benefit Society. We are therefore of the view that the issue raised in the second question is purely academic in so far as this tax case is concerned. Therefore we are not answering the second question of law referred to us though we are not confirming the order of the Appellate Tribunal on the merits of the case. Accordingly we return the second question of law without providing an answer to it. Accordingly we answer the questions of law referred to us as under : First question of law : It is answered in the affirmative and against the Revenue Second ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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