Interest to Partners is allowable even if there is no book profit

RELEVANT PARAGRAPH  10. The core of controversy in this appeal is against the deductibility or otherwise of an interest of Rs. 6,50,236 allowed to the partners which was claimed as deduction. The case of the Assessing Officer is that no deduction on account of interest to partners can be allowed. The learned D. R. submitted that the rental income of Rs. 16.70 lakhs was rightly held to be taxable under the head `Income from other sources’ and hence only deduction as allowable u/s. 57 could be granted. He submitted that the expenses incurred wholly and exclusively for the purpose of earni...