JUDGMENT : S.C. Mohapatra, J. - A statement was called for u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), on the following question : "Whether the Tribunal erred in law in its direction that interest paid to the partner in his individual capacity was allowable in his individual capacity when the partner represented the Hindu undivided family in the firm ?" 2. The assessee is a partnership firm having Hindu undivided families as its partners. In the assessment year 1977-78, the firm took a loan from members of the Hindu undivided families which are partners of the assessee firm. In respect of the amounts borrowed from these individuals which did not belong to the Hindu undivided families, interest was paid by the partnership firm to those individuals. The Income Tax Officer, relying upon Section 40(b) of the Act, held that, in view of the legislative mandate, interest paid to these individuals is not liable to be deducted. 3. Section 40(b) reads as follows : "(b) in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm." 4. The application of Section 40(b) depends upon the status of the person qua the loan and the firm. If the person is a member of the partnership, Section 40(b) is attracted. Even if the person is not a partner of the firm but has lent the money belonging to a partner to the firm, Section 40(b) would be attracted. Where, however, the person lending is not a partner, and the money lent does not belong to a partner, Section 40(b) has no application. 5. Mr. Arjun Agrawal, learned counsel for the assessee, has fairly placed all the decisions at hand on the question before us. In the decisions reported in Commissioner of Income Tax, Karnataka (Central) Vs. Khoday Eswarsa and Sons Chandmul Rajgarhia Vs. Commissioner of Income Tax, and COMMISSIONER OF Income Tax Vs. NITRO PHOSPHETIC FERTILIZER. it has been held that a loan from a member of the Hindu undivided family to a firm of which such family is a partner will attract Section 40(b) in respect of interest paid by the firm. On the other hand, there are a series of decisions including the Full Bench decision of the Gujarat High Court reported in Chhotalal and Co. Vs. On the other hand, there are a series of decisions including the Full Bench decision of the Gujarat High Court reported in Chhotalal and Co. Vs. Commissioner of Income Tax, Gujarat where a different view has been taken which supports the view taken by the Appellate Tribunal. The other decisions on the point are : (a) Commissioner of Income Tax, Bombay City II Vs. Raghavji Anandji and Co., . (b) Venkatesh Emporium v. CIT [1982] 137 ITR 593 and T.M.N.M. SOMASUNDARA NADAR SONS Vs. COMMISSIONER OF Income Tax, TAMIL NADU-IV., . (c) N.T.R. Estate Vs. Commissioner of Income Tax, . (d) Commissioner of Income Tax Vs. Narbharam Popatbhai and Sons, . (e) GAJANAND POONAM CHAND AND BROTHERS Vs. COMMISSIONER OF Income Tax., . (f) Commissioner of Income Tax Vs. Moti Lal Ramjiwan and Co., . (g) Commissioner of Income Tax Vs. Tej Cloth Weaving Factory. (h) Ghasilal Kasturchand Vs. Commissioner of Income Tax. (i) Hindustan Steel Forgings Vs. Commissioner of Income Tax. (j) CIT v. Hansa Dyeing Printing Works. 6. In view of the clear language of Section 40(b) of the Act, there can be no doubt that the amount paid as interest to a partner cannot be deducted from the income of the partnership firm. Where a person is not a partner, the interest paid is to be deducted. Even the karta of a Hindu undivided family can have separate funds over which the family has no right, and where such family is a partner, interest paid on loan taken by the firm from the separate and individual fund of the karta and not from joint family fund would not be covered u/s 40(b). Interest paid to other members of a Hindu undivided family for loans taken from their individual separate funds stand on a stronger footing. However, in order to get the deduction, the firm has to clearly prove the source from which the loan was taken. The Assessing Officer is to take into consideration the presumptions available in general Hindu law to come to a correct conclusion for applying Section 40(b). 7. We are satisfied that the Tribunal has taken the correct view in law and the question is answered against the Revenue. No costs. J.M. Mahapatra, J. 8. I agree.