9911796707
TMI Blog1986 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 was valid. The grounds of appeal Nos. 1 to 4, therefore, are rejected. 2. The next contention in this appeal is that the Commissioner (Appeals) was not justified in holding that the assessee was not entitled to relief under section 80J of the Act. The assessee-firm has head office at Barhaj (Deoria) and branch at Bhilai. The head office out of its borrowed funds gave loan of Rs. 10,38,782 to the branch at Bhilai and the branch started the alleged new unit on which relief under section 80J is claimed. The assessee claimed relief under section 80J, but now the law is fully settled that relief under section 80J is not admissible on borrowed capital. The head office gave loan to the branch out of borrowed funds and the branch out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en from head office, it was argued, the assessee was entitled to relief under section 80J. Reliance was also placed in this connection on the circular dated 13-12-1963 of the Board, in which it was made clear that if a new industrial undertaking was taken over by another person before the expiry of five years, the benefit under section 84/80J of the Act would be available to the successor for the unexpired period. It was argued that the benefit was available to the undertaking irrespective of the owner. It was, thus, argued that as the undertakings was started with the help of the capital taken from the head office, relief under section 80J was available to the assessee. 4. The departmental representative argued that there was no differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of Rs. 16,214 paid to Bhagwati Pd. Kedia, Mohan Lal Kedia and Kailash Pati Kedia. In this connection, the representative of the assessee first argued that while making the reassessment, this addition could not have been made as the reassessment was held to be valid by the Tribunal on another issue and not on this issue. Further, it was argued that the partners were HUFs and interest was not paid to these persons in their individual capacity. Thus, interest was not paid to partners and the disallowance of interest was not justified. Reliance was placed in this connection on the Full Bench decision of the Gujarat High Court in Chhotalal Co. v. CIT [1984] 150 ITR 276. 7. The departmental representative argued that the case reopened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar as interest payment were made to individuals. However, he submitted that in the following cases the interest payments were made to HUFs and, therefore, disallowance was not justified in view of the subsequent decision of the Hon'ble Allahabad High Court in Ram Lal Sons v. CIT [1980] 124 ITR 157 : Serial Name of HUF Amount of No. interest Rs. 1. Shri Bhagwati Pd. Parsan Kumar 1,673 2. Ram Dulari Anand Kumar 1,672 3. Kailash Pati Naveen Kumar 2,659 4. Manju Devi Vinai Kumar 2,660 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm can treat only the karta and not the other members of the HUF as its partners. The capacity in which he receives the payment, namely, for and on behalf of the family or for his own benefit and interest, is immaterial. Payment to a person who is a partner is the only criterion for the purpose of section 40(b) of the Income-tax Act, 1961, which prohibits in absolute terms any allowance in respect of any payment by way of interest, salary, bonus, commission or remuneration made by the firm to any of its partners and does not make any distinction in repeat of the character or capacity in which the payment is made to the partner. If a partner makes deposits in the firm of monies belonging to his HUF and also money belonging to him individ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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