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2015 (6) TMI 214 - HC - Income TaxEligibility for deduction u/s 36(1)(iii) - interest paid on the borrowing - Right of outgoing partner in certain cases to share subsequent profits - Held that:- The outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property. The amount of ₹ 1,30,00,000/- paid is not a share of the profit of the retiring partner in the partnership firm. Therefore, applying the law laid down in Madhav Prasad Jatia v. CIT U.P reported in (1979 (4) TMI 2 - SUPREME Court) when the aforesaid amount of ₹ 75,00,000/- is not borrowed by the assessee for the purpose of business and does not laid out expenditure wholly and exclusively for the purpose of business of the firm, claim for deduction under Section 36(1)(iii) was not justified. The Authorities have rightly disallowed deductions and therefore, we do not see any merit in this appeal. - Decided against assessee.
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