1991 (9) TMI 28

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..... are concerned with the assessment year 1973-74 for which the accounting period is Samvat year 2028. Four partners of the assessee-firm obtained loan of Rs. 10,000 each in their individual names from the Surat People's Co-operative Bank and the aggregate amount of Rs. 40,000 so borrowed by the partners was transferred on that very day to the assessee-firm to the credit of an account called the " Su .....

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..... ore the Appellate Assistant Commissioner went in further appeal to the Tribunal. The Tribunal, following its earlier decisions, held So the effect that the partners of the assessee-firm had acted as intermediaries or a conduit pipe to obtain loan for the purpose of the business of the assessee-firm and that, in substance, the amount borrowed from the partners should be regarded as moneys borrowed .....

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..... through its four partners who had acted clearly as intermediaries or conduit pipe to obtain loan for and on behalf of the assessee-firm. The Tribunal has held that, in substance, the amount was borrowed by the assessee-firm for its business. There is no reason or justification to disturb this finding of fact recorded by the Tribunal. It, thus, becomes clear that the interest in question has not be .....

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..... disallowed deduction of the interest paid to the Life Insurance Corporation and his decision was confirmed in appeal by the Appellate Assistant Commissioner. On further appeal, however, the Tribunal held that the disallowance was not justified. The Division Bench of the Punjab and Haryana High Court, while reversing the decision of the Tribunal, observed that the amount that was taken as loan by .....

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..... is a clear finding of fact to the effect that it was the assessee-firm which had borrowed money from the bank through its partners. Since it was the assessee-firm which had borrowed money for the purpose of its business, the interest paid to the bank could not have been disallowed as deduction under section 40(b). We, therefore, agree with the view taken by the Tribunal and answer the question wh .....

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