COMMISSIONER OF INCOME TAX Vs. JANKI DASS

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred by the tribunal for the opinion of the High Court :

(2.) THE brief facts are that the assessee -firm credited interest of Rs. 5,758 in the account of the Hindu undivided family relying on the order relating to the assessment year 1975 -76. The said claim of the assessee -firm was disallowed by the Income -tax Officer. In the next year, the Income -tax Officer held that the interest that was credited to the Hindu undivided family was, in fact, paid on the capital of the partners and, therefore, that was not allowable under the Income -tax Act. The assessee -firm took up the matter in appeal. The appeal taken by the assessee was rejected by the Appellate Assistant Commissioner. But, in the second appeal, the contention was upheld and the orders of the two authorities were reverse. The Tribunal held that the interest paid to the Hindu undivided family was allowable.

(3.) THE controversy raised before us is since covered by a Division Bench decision of this court in CIT v. Kishanlal and Bros. . We need not deal with the various aspects of the arguments raised by the two sides. The Division Bench held that the payment of interest to the Hindu undivided family was not payment to a partner of the firm and as such was allowable. A distinction was made by the Bench between the position of a partner in his individual capacity and that of the firm.