1980 (1) TMI 15

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..... case, the interest of Rs. 5,915, Rs. 1,641 and Rs. 2,053 paid by the assessee to (1) K. Krishnaiah Chetty (loan account), (2) K. Thimmappa Padmavathamma (HUF account), and (3) K. V. Raghavulu Gupta Sujatamma (HUF account), respectively, can be disallowed under section 40(b) of the Income-tax Act, 1961 ? " The assessee, a registered firm of three partners sharing profits and losses equally, claim .....

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..... was in favour of the individual partners and later this was transferred to the accounts of the HUFs. Consequently, this transfer must be treated as a ruse adopted by the assessee to claim the benefit under s. 40(b) of the Act. That contention found favour with the ITO (sic) and AAC, and the claim was rejected. But on appeal by the assessee the Appellate Tribunal held that two important factors wer .....

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..... llate Tribunal has found that the interest was paid to the HUF and not to the individual partners of the firm. That being the finding of fact which the Appellate Tribunal could reach on the material before it, the answer to the question must necessarily be given in favour of the assessee. The facts of this case are more akin to the facts in Addl. CIT v. Vallamkonda Chinna Balaiah Chetty and Co. [1 .....

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