9911796707
TMI Blog1986 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the money made available to it by the head office started the new u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief 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 difference whether the funds were borrowed by the head officer or by the bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under section 147 by the ITO for two purposes one of which was to disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 8,664" ----- It is clear that for the disallowance of interest of Rs. 16,214 which is at present under consideration before us, the assessee has raised contention before the Commissioner (Appeals) in the grounds but at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance 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 individually, in fact and in law, the partner beings in the money. In both cases, the payment of interest by the firm to such a partner is as a partner who really has the beneficial interest in such payments and, therefore the payment of interest is not deductible." The facts in that case were exactly identical to the facts under consideration before us. The decision of the Allahabad High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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