1996 (8) TMI 59 - HC - Income Tax

Summary

Issues:
1. Deduction of payment of interest to minor children.
2. Proof of genuineness of loans through V.D. certificates.
3. Admitting fresh evidence without giving an opportunity to the Assessing Officer.

Analysis:
The case involved an income-tax reference under section 256(1) of the Income-tax Act, 1961, where the Tribunal referred three questions for consideration by the High Court. The first issue was whether the Tribunal was correct in not interfering with the Appellate Assistant Commissioner's order allowing deduction of interest payment to the assessee's two minor children. The second issue revolved around the genuineness of loans and the sufficiency of V.D. certificates as proof, which the Tribunal confirmed. The third issue concerned the Appellate Assistant Commissioner admitting fresh evidence without giving the Assessing Officer an opportunity to counter it.

The assessee had claimed to have paid interest to her children, but the Income-tax Officer disallowed it due to lack of evidence. The Appellate Assistant Commissioner directed the allowance of interest payment but disallowed it for one child. The Tribunal upheld this decision. The assessee produced voluntary disclosure certificates at the appellate stage, which were not presented before the Income-tax Officer. The certificates showed deposits by the children with the assessee, leading to acceptance of loans by two children but not the third. The High Court found these to be questions of fact, with no legal issues involved. The Tribunal's approach was deemed correct as the evidence was not before the Income-tax Officer initially.

Ultimately, the High Court ruled in favor of the assessee, stating that no legal questions were present due to the factual nature of the case and the consistent findings of the lower courts. The reference was answered against the Revenue, upholding the Tribunal's decision regarding the deduction of interest payment to the minor children and the acceptance of V.D. certificates as proof of loans, while dismissing the issue of admitting fresh evidence without giving the Assessing Officer an opportunity to respond.