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Section 40(b) of Income-tax Act, 1961 - Business disallowance - Interest, salary, etc. paid by firm to partner - Assessment years 1970-71 and 1971-72 - Pursuant to partition of HUF properties, there coparceners of HUF, viz. 'P', 'V', and 'S' formed a partnership firm - 'P' died but partnership continued thereafter - 'V' having succeeded to P's entire property including his share in partnership firm, share income was assessed in status of HUF in hands of 'V' - P's account succeeded by 'V', was credited to a separate account, and account as partner was styled as 'V' (HUF) Account - Interest received from partnership was credited to individual account of 'V' - Asessee's claim for deduction of interest income was disallowed by ITO - AAC and Tribunal confirmed ITO's order - Whether Tribunal having recorded a finding that there were two accounts one HUF account and another individual account, and having held that interest was paid to 'V" in capacity of karta representing HUF, erred in concluding that interest was credited to partner in both accounts - Held, yes - Whether, Tribunal, on aforesaid findings of fact, could not say that section 40(b) was clearly attracted - Held, yes - whether, consequently, interest credited to V's individual account could not be disallowed under section 40(b) - Held, yes FACTS There was a HUF consisting of 'P', his son 'V' and his grandson 'S". Pursuant to a partition in HUF the three divided members formed a partnership firm by a deed. 'P' died but the partnership continued even thereafter. His son 'V', succeeded to P's properties including the capital standing to his credit in the firm, 'V' was being assessed as a HUF in respect of the share income from the partnership firm. The account standing in P's name and inherited by 'V' was put in a separate account. The account as partner of the firm was styled as 'V' (HUF) account. For the assessment years 1970-71 and 1971-72, the interest received from the partnership was credited to V's individual account, and certain other amount was credited to the 'V' (HUF) account. The ITO disallowed the interest income under section 40(b). On second appeal, the Tribunal held that the interest was being…

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