{"id":184414,"date":"1989-03-02T00:00:00","date_gmt":"1989-03-01T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ghasilal-kasturchand-vs-commissioner-of-income-tax-on-2-march-1989"},"modified":"2016-06-21T02:57:47","modified_gmt":"2016-06-20T21:27:47","slug":"ghasilal-kasturchand-vs-commissioner-of-income-tax-on-2-march-1989","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ghasilal-kasturchand-vs-commissioner-of-income-tax-on-2-march-1989","title":{"rendered":"Ghasilal Kasturchand vs Commissioner Of Income-Tax on 2 March, 1989"},"content":{"rendered":"<div class=\"docsource_main\">Madhya Pradesh High Court<\/div>\n<div class=\"doc_title\">Ghasilal Kasturchand vs Commissioner Of Income-Tax on 2 March, 1989<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1989 178 ITR 633 MP<\/div>\n<div class=\"doc_author\">Author: A C Sohani<\/div>\n<div class=\"doc_bench\">Bench: G Sohani, R Verma<\/div>\n<\/p>\n<pre><\/pre>\n<p>JUDGMENT<\/p>\n<p>  G.G. Sohani, actg. C.J. <\/p>\n<p>1. By this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as &#8220;the Act&#8221;), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion.\n<\/p>\n<p>  &#8220;Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the interest amount of Rs. 10,650 paid by the assessee-firm to Shri Umraomal, in his individual capacity, was liable to be disallowed in the hands of the firm under Section 40(b) of the Income-tax Act, 1961 ?&#8221;\n<\/p>\n<p>2. The material facts giving rise to this reference, briefly, are as follows :\n<\/p>\n<p>  The assessee is a registered firm and the assessment year in question is 1978-79. One Shri Umraomal was a partner of the assessee-firm as representative of his Hindu undivided family, Umraomal Kasturchand. A sum of Rs. 10,650 was paid by the assessee-firm as interest to Shri Umraomal on the amount lent by Umraomal to the assessee-firm in his individual capacity. The Income-tax Officer, while framing the assessment, held that the interest amount of Rs. 10,650 paid to Shri Umraomal in his individual capacity was not deductible in view of the provisions of Section 40(b) of the Act. The appeal preferred by the assessee before the Appellate Assistant Commissioner was dismissed. The assessee, thereupon, filed a second appeal before the Tribunal, which was also dismissed. Aggrieved by the order passed by the Tribunal, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this court for its opinion.\n<\/p>\n<p>3. At the time of hearing, learned counsel for the parties conceded that the matter arising in this case is concluded by the judgment of a Full Bench of this court in CIT v. Narbharam Popatbhai and Sons [1987] 166 ITR 534. In that case, it has been held that if a person is a partner in a firm in a representative capacity and if such partner lends to the firm any money in his individual capacity, then the interest paid by the firm on the amount so lent by him would not be liable to be added back under Section 40(b) of the Act. Following that decision, it must be held that the Tribunal was not right in holding that the interest amount of Rs. 10,650 paid by the assessee to Shri Umraomal in his individual capacity was liable to be disallowed in the hands of the assessee-firm under Section 40(b) of the Act.\n<\/p>\n<p>4. Our answer to the question referred to this court is, therefore, in the negative and in favour of the assessee. In the circumstances of the case, the parties shall bear their own costs of this reference.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Madhya Pradesh High Court Ghasilal Kasturchand vs Commissioner Of Income-Tax on 2 March, 1989 Equivalent citations: 1989 178 ITR 633 MP Author: A C Sohani Bench: G Sohani, R Verma JUDGMENT G.G. Sohani, actg. C.J. 1. By this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as &#8220;the Act&#8221;), the Income-tax [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,24],"tags":[],"class_list":["post-184414","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madhya-pradesh-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Ghasilal Kasturchand vs Commissioner Of Income-Tax on 2 March, 1989 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ghasilal-kasturchand-vs-commissioner-of-income-tax-on-2-march-1989\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ghasilal Kasturchand vs Commissioner Of Income-Tax on 2 March, 1989 - Free Judgements of Supreme Court &amp; 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