GAJANAND POONAM CHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) -

(2.) THIS common order shall dispose of both the above references, which relate to the same assessee. Reference No. 1 of 1982 relates to the assessment years 1974-75 and 1978-79, while Reference No. 2 of 1982 relates to the assessment year 1979-80

(3.) IT would be useful to refer to the definition of "person" given in section 2(31) of the Act. This is an inclusive definition and it clearly shows that an "individual", a "Hindu undivided family" and a "firm" are to be treated as distinct persons or entities for the purposes of the Income-tax Act. In this scheme of things, it is obvious that under the provisions of the Income-tax Act, there is no inconsistency in treating an individual as a person distinct from the same individual representing the Hindu undivided family as its karta for the purposes of partnership in a firm. The question, therefore, is whether, in such a situation, for the purpose of section 40(b), the distinction between the two personalities of an individual, which is clearly recognised by the provisions of the Income-tax Act is to be treated as obliterated ? We do not find anything in section 40(b) requiring obliteration of the distinction between these two personalities of an individual in order to hold that merely because an individual is also in his representative capacity as karta of a Hindu undivided family, a partner of the assessee-firm, the interest paid to him in his distinct individual account must be disallowed under section 40(b).