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TMI Blog1985 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purchase of a property ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the deduction of interest could not be allowed on the ground that the applicant had no source of income from business through the firm ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the disallowance of the interest?" The assessee is a cine artiste. Daring the relevant accounting year relating to the assessment year 1977-78, the assessee had borrowed a sum of Rs. 3 lakhs from various persons agreeing to pay interest at 15 per cent. for utilising the said amount for investment in a firm called Sevenseas International. However, the said fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see contends before us that the Tribunal has not properly understood the scope and ambit of section 67(3) of the Act and that in dealing with the scope of the said section, the Calcutta High Court in CIT v. C. L. Bajoria [1981] 129 ITR 772, has held that all that is required under section 67(3) is that the partner should borrow some money for the purpose of investment in the firm as capital or as loan, that there is no further qualification that the firm should utilise the money in question in any particular manner and that, therefore, the interest on the amount borrowed by the partner which he has utilised in the firm either as capital or as loan was allowable in computing his share of income from the firm under section 67(3) of the Act. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not commenced business at all and the amount borrowed, Al though invested in the firm, has not been utilised in connection with any business. Though the assessee has paid interest on the amount borrowed, we do not see how the interest paid could be taken to be a charge on the assessee's total income which mainly consists of his professional income as a cine artiste. Learned counsel for the assessee then refers to the decision of the Supreme Court in CIT v. Rajendra Prasad Moody [1978] 115 ITR 519. Here again, we do not see how the said decision can help the assessee. In that case, the Supreme Court, while considering the admissibility of deduction under section 57(iii) in computing the income from dividend under the head " Income from oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1976] 105 ITR 295. In that case, after referring to the scope of section 67(3), the court observed as follows (p. 310),: "Section 67 deals with the method of computing a partner's share in the income of the firm. Sub-clause (3) thereof provided for the deduction of interest paid on capital borrowed for the purpose of investment in the firm. As a specific provision has been made under section 67(3) with reference to the claim for deduction of interest from the share of income, it would follow that section 36(1)(iii), which is in the nature of a general provision relating to all businesses, would have no application. Section 67(3) provides for the deduction of any interest paid by the partner on capital borrowed by him for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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