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2002 (8) TMI 81 - ALLAHABAD HIGH COURT"1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the interest paid to the assessee was not includible in the hands of the firm under section 40(b) of the Income tax Act, 1961? - 2. Whether, on the facts and in the circumstances of the case, there was material before the Tribunal to hold that the two partners were carrying on some individual business and having some other undisclosed sources of income?" - it appears that the Supreme Court in the case of Brij Mohan Das Laxman Das v. CIT held that even for the period anterior to April 1, 1985, any interest paid to a partner, who is a partner representing his Hindu undivided family on the deposit of his personal/individual funds, does not fall within the mischief of clause (b) of section 40 of the Act and agreed with the view of the Rajasthan High Court that Explanation 2, in the context of clause (b) of section 40, is declaratory in nature. - the position of law is well settled and we do not think that this question requires any further elucidation. Accordingly, both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
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