TMI Blog1979 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Mohankumari, partner. 2. The assessee is a registered firm. During the asst. yr. 1976-77, relevant to the accounting period ending 31st March, 1976 the ITO found that one of the partners, Smt. Mohan Kumari, withdrew a sum of Rs. 40,000 on 20th Dec., 1975. The ITO also found that at the end of the accounting period this partner had a debit balance in her capital account in the books of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,333 made by the ITO. Aggrieved the Department has come up in the present appeal. 3. After hearing the ld. representatives of the parties, we do not find any merit in this appeal. We find that on 20th Dec., 1975, when a sum of Rs. 40,000 was withdrawn by the lady, the debit balance in her account was only Rs. 15,941. Thus, only interest on the debit balance of Rs. 15,941 could be disallowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt advanced to the lady partner was not out of any borrowed funds, but it was directly advanced out of the deposits made by Shri Dilip Kumar, partner. In these circumstances, no disallowance of interest could be made on the debit balance in the account of the lady partner. The order of the CIT(A) is, therefore, confirmed. 4. The only other ground taken by the Department in this appeal is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time and invest the money anywhere they liked. He found that in spite of the withdrawals made by the partners, there was still a credit balance in their individual accounts, and hence the financial arrangements made by the assessee firm with its partners did not militate against any provisions of the IT Act. The Department is aggrieved by the above finding of the CIT(A). 5. We have heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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