1996 (12) TMI 2 - SUPREME COURT

Whether interest paid to a partner on the amounts deposited by him in his individual capacity is hit by clause (b) of section 40 where the partner is a partner not in his individual capacity but as representing a Hindu undivided family (HUF) - in view of Explanation 2 to section 40(b) inserted with effect from 1.4.1985, interest paid to him in his individual capacity even for periods prior to 1.4.1985 cannot be disallowed in the assessment of the firm.