Law:

Section:

Section 67 of the Income-tax Act, 1961 - Firm - Computation of partner's share in income of - Assessment year 1977-78 - Whether in absence of any share income from partnership, a partner cannot claim deduction for interest paid on capital borrowed for investment in partnership as against his income under other heads on basis of section 67(3) - Held, yes FACTS During the accounting year relating to the assessment year in question, the assessee, a cine artiste, borrowed certain amount on interest for utilizing the same for investment in a firm. However, the said firm did not commence its business and the assessee got no share income therefrom. The deduction claimed by the assessee of the interest paid on the capital borrowed as against his professional income was rejected by the assessing authority on the ground that deduction could be allowed under section 67(3) only against the assessee's share income from the partnership and when there was no share income from the partnership, there was no question of deduction of interest paid on the capital invested therein. The appellate authority as well as the Tribunal upheld the view of the assessing authority. On reference: HELD In the absence of any share income from the partnership, the partner cannot claim deduction for the interest paid on the share capital borrowed for investment in the partnership as against his income under other heads on the basis of section 67(3). In the instant case, though the assessee borrowed a sum and invested the same in the firm, the firm had not commenced business at all and the amount borrowed, though invested in the firm, had not been utilised in connection with any business. Though the assessee had paid interest on the amount borrowed, the interest paid could not be taken to be a charge on the assessee's total income which mainly consisted of his professional income as a cine artiste. In this view of the matter, the Tribunal had come to the right conclusion and therefore, the petition making reference under was to be dismissed. Note: The decision is in favour of the revenue. CASES REFERRED TO Raja (M.S.P.) v. CIT [1976] 105 ITR 295 (Mad.), CIT v. Bajoria (C.L.) [1981] 129 ITR 772…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492