TMI Blog1985 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, namely, Shri M. Ananda Rao, Shri M. Vishwanatha Rao, Shri M. Suresh Rao, Shri M. Janardhana Rao and Shri M. Vinoda Rao, had withdrawn the funds lying in the capital account of the firm which were not earning any interest and advanced the same to their respective wives, minor children and joint families at a nominal interest of 1 per cent per annum. Thereafter the same funds were deposited with the firm by the wives, minor children and joint families, and the firm has paid interest to them at the rate of 15 percent per annum. 3. The contention of the revenue was (a) that a loan transaction is a transfer within the meaning of section 64(1)(vii) of the Act so that the income accruing therefrom was to be taken as the income of the partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the interest of 15 per cent which accrued to the wives, minor children and joint families could not have been transferred by the partners as it did not exist at the time of the granting of the loan and there could be a transfer only of an existing property and not a future property. Hence, we are convinced that apart from the reasons given in the order of the Tribunal, the contentions of the revenue for applying the provisions of sections 64 and 60 are untenable. 5. In the alternative, it was contended by the revenue that at least in respect of granting of a loan by the individual partner to his minor children and his joint family where there were no other adult coparceners, the transaction was itself non est in law, because a loan e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue was that since there appeared to be a scheme to avoid the application of sections 40(b) and 64 and thereby reduced the incidence of tax, the entire transaction should be viewed as one carried out by the partner himself and the income as accruing to the partner completely disregarding the transaction carried out by him and others. This argument has only to be stated to be rejected because there is no provision in the Indian income-tax law analogous to the Australian law whereby, merely because the incidence of tax is reduced by arranging the affairs of the assessee in a particular manner, such a transaction could be ignored to impose a higher burden on him. Quite the contrary, it is well recognised that the assessees in India could la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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