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TMI Blog1990 (11) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... took a loan from M/s. P.R. Enterprises, in which she is a partner. It was claimed before the ITO that the amount of loan taken from M/s. P.R. Enterprises had been invested in the firm of M/s. New Kampala Service Station where, too, she is a partner. She, accordingly, claimed deduction of interest paid to M/s. P.R. Enterprises as a deduction from the income. The ITO rejected the claim on the reasoning that there was no direct nexus between the loan taken from P.R. Enterprises and investment made by the assessee in M/s. New Kampala Service Station. Similar claim was made again for the assessment year 1985-86 and the assessee further claimed that the entire income of M/s. P.R. Enterprises being from the interest paid by the assessee, at least ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1985-86, the gross interest income of the firm, P.R. Enterprises, was Rs. 44,830.70. Out of that interest income, a sum of Rs. 30,384 represented interest received from the assessee and, therefore, the interest income of M/s. P.R. Enterprises from Smt. Navani, the present assessee, represented approximately 56% of its gross total income. If the firm M/s. P.R. Enterprises, had not received any interest from the assessee, the share of profit of the assessee would have been, practically, nil. Similarly, in 1985-86, the interest paid by the assessee to the firm of M/s. P.R. Enterprises amounted to Rs. 34,030.70 as against the interest income of Rs. 44,830.70 earned by the firm. This represented approximately 76% of the gross total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned counsel for the assessee, it is seen that the argument is really attractive and novel and, on the surface, it looks quite plausible. But it is in such a case that a reasonable caution has to be exercised. The Supreme Court, in a number of cases, sounded similar warning and it has been pointed out in Gurcharan Singh v. State of Punjab 1972 SC 549 and in Prakash Chandra Pathak v. State of U.P. AIR 1960 SC 195 that, as on facts, no two cases could be similar and its own decisions, which were strictly on a question of facts, could not be relied upon as a precedent for decision of other cases. 9. In the case of Saroj Kumar Mazumdar v. CIT [1959] 37 ITR 242, the Supreme Court has observed that no decision can be straight preceden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of making it pay and not any other capacity than that of the trader. The section also provides that the expenditure should not be in the nature of capital or personal expenditure of the assessee. Unless the tests laid down by the Act are fulfilled, the interest paid by the assessee on the borrowed money from the firm has to be disallowed, as was done by the assessing officer. 11. With regard to the adjustment against the interest income of the assessee from the firm, the argument advanced by the learned counsel for the assessee is quite specious, but the same cannot bear scrutiny. Under the Income-tax Act, the firm and the partners are two different entities. The assessee can only claim adjustment of the expenditure on interest paid if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee could, in any way, prove that the borrowed money has been incurred or invested for the purpose of business, then she will be entitled to the deduction of the interest from any income even though that specific expenditure or investment does not bear direct income during the year, as held in CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC). Since there is no evidence to show that the borrowed money, in this case, has been utilised for the purpose of the business, the claim of deduction cannot be allowed. I hold accordingly and uphold the order of the learned DC(A) on this point. 12. The next ground, relevant only for the assessment year 1985-86, is in regard to the disallowance of interest amounting to Rs. 975, paid to Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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