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TMI Blog1979 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the three assessees to the bank for obtaining loans for the purposes of their business. Since common contentions are involved and all the 3 appeals have been argued by the same counsel, they are disposed of by a common order for the sake of convenience. 2. The partners of the three firms of Neemuch viz.(i) M/s Prahlad Das & Company; (ii) M/s Goyal Traders and (iii) M/s Goyal Finance Corporation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed under s. 36(iii) of the IT Act and was allowable as deduction against the profits of the firms. It was pleaded that the borrowed funds were not diverted for use of the partners for their private purposes but were utilised for the purposes of business. It was also submitted that the partners were at liberty to withdraw funds out of their capital account and the mere fact that the firms ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been credited in the books of accounts of the firms and not in the individual accounts of the partners. The leaned counsel for the assessee, on the other hand, has reiterated the contentions which were made before the AAC and has submitted that on the facts of the case the AAC was quite justified in deleting the disallowance of interest paid by the three firms to the banks. 5. After consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cifically utilised for the purposes of the business and hence as per the provisions of s.36(iii) of the IT Act, interest paid by the firms to the bank was clearly an allowable deduction. We are unable to accept the contention of the learned representative of the Department that since the fixed deposits were pledged as security with the banks they became assets of the firms. The mere pledging of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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