2003 (10) TMI 43 - HC - Income Tax

The question that arises in this case is whether the arrangement arrived at between the parties was not genuine and whether it had been adopted only with a view to deprive the Revenue of the tax due or was it a genuine arrangement. The Tribunal as also the Commissioner of Income-tax (Appeals) accepted the explanation and found as a fact that the arrangement was genuine and there was no intention to hoodwink the Revenue. This is a pure finding of fact arrived at by the income-tax authorities and no question of law much less a substantial question of law arises from the impugned orders.

Summary

Issues:
1. Appeal against addition of income for assessment year 1990-91.
2. Genuine nature of arrangement between parties.
3. Intention to deprive Revenue of tax.

Analysis:
1. The judgment pertains to an appeal under section 260A of the Income-tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal regarding the addition of Rs. 4,08,768 to the income for the assessment year 1990-91. The appellant, in this case, had entered into an agreement to lease machinery to a company in Madras. The appellant included rental income for only four months in the return for that year, citing an agreement with the lessee to not accrue rent for the remaining eight months due to financial difficulties faced by the lessee. The Assessing Officer added the amount to the income, which was later deleted by the Commissioner and upheld by the Tribunal.

2. The main issue addressed in the judgment was the genuineness of the arrangement between the parties regarding the non-accrual of rent for a certain period. The court examined whether the arrangement was bona fide or merely a tactic to evade tax. Both the Tribunal and the Commissioner found the explanation provided by the appellant to be genuine and accepted that there was no intention to deceive the Revenue. The court emphasized that this determination was a factual finding made by the income-tax authorities, and no legal question, let alone a substantial one, arose from their decisions.

3. Lastly, the judgment also considered the aspect of whether the arrangement was made with the intention to deprive the Revenue of the tax rightfully due. The court reiterated that the authorities had already established the genuineness of the arrangement and the absence of any fraudulent intent. Consequently, the court found no merit in the appeal and dismissed it, affirming the decisions of the Commissioner and the Tribunal.