TMI Blog1990 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of 63 months. Out of the amount so withdrawn, a sum of Rs. 1,00,000 each was deposited in the names of the two partners and the amount payable on maturity in respect of each of the deposits was Rs. 1,67,333. On July 21, 1977, the assessee filed a return disclosing an income of Rs. 14,818 without including Rs. 14,620 being the interest that had accrued on the fixed deposits in the names of the partners. Along with the return, the assessee filed a balance-sheet in which Rs. 2,14,620 was shown as the amount lying in fixed deposits with the Indian Overseas Bank as one of the items of assets of the firm. On the liabilities side, Rs. 1,00,000 under capital account and credit balance of Rs. 23,363.63 and Rs. 20,468.36 in the accounts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 256(1) of the Income-tax Act, 1961, has been referred for the opinion of this court, at the instance of the assessee : "Whether, on the facts and circumstances of the case, the Tribunal was right in assessing as income of the firm a sum of Rs. 14,620 being the accrued interest on the fixed deposits in the names of the partners ?" The assessee appeared in person and argued his case. According to him, amounts had been withdrawn from the capital account of the individual partners of the firm and that thereafter such amounts belong to the partners in their individual capacities and the interest earned on the investment of the amounts was not liable to be included as the income of the assessee-firm. On the other hand, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets. However, it has to be noticed that in a revised balance-sheet filed on September 9, 1977, subsequent to the filing of the return, it is mentioned as if each of the two partners had withdrawn Rs. 1,00,000 on a particular date. But the entries in the revised balance-sheet will not be of any avail. We may also point out that as per the entries in the balance-sheet dated June 18, 1977, the investment is shown to have been made with money belonging to the firm and under section 14 of the Indian Partnership Act, the investment should be deemed to be for and on behalf of the firm. We may also refer in this connection to the observations in Sudarsanam Maistri v. Narasimhulu Maistri [1901] ILR 25 Mad 149 to the effect that lands and houses bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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