9911796707
TMI Blog1981 (11) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... section 40(b) amounted to a higher figure by Rs. 83,780. In this connection, the audit pointed out to the ITO that although he had added back the sum of Rs. 30,557 paid to the partners in their individual capacity, the additional amount of Rs. 83,780 paid to them as kartas of their respective HUFs was not added. The audit also observed that the prohibition contained in section 40(b) was absolute and made no distinction between payments by way of interest or salary to a partner as a partner and such payments made to him in a different character, e.g., in his personal capacity, when he was a partner in his capacity as the karta of a joint family or in his capacity as the proprietor of an independent concern. In this connection, the audit als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the decision of the Allahabad High Court in the case of London Machinery Co. 5. The assessee is now in appeal before us. Before us also, the counsel for the assessee made two submissions. The first was that initiation of proceedings under section 147(b) was illegal in the light of the principle laid down by the Supreme Court in the case of Indian Eastern Newspaper Society and secondly that, in any case, the disallowance of interest even on merits was not correct. 6. The learned counsel for the assessee submitted before us that the decision of the Allahabad High Court in London Machinery Co. was rendered on 26-10-1978, while the notice under section 148 read with section 147(b) was issued by the ITO on 23-9-1978. According to him, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down only by a person or body with authority in that behalf, the knowledge or awareness of the law may be communicated by anyone. No authority is required for the purpose." 8. We have carefully considered the submissions placed before us. We are inclined to agree with the submission of the learned departmental representative that the case of the assessee is covered by the principle of the Supreme Court's decision as quoted above. We find that even earlier to the decision of the London Machinery Co. there were several other decisions, which laid down the principle that the prohibition contained in section 40(b) or in the corresponding section 10(4)(b) of the 1922 Act was absolute and made no distinction between payments by way of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
