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Issues involved:
The judgment pertains to Income-tax Reference No. 298 of 1992 and Income-tax Reference No. 299 of 1982, concerning the applicability of section 28(iv) of the Income-tax Act, 1961, and the inclusion of specific amounts in the income of the assessees. Income-tax Reference No. 298 of 1992: The case involved the assessment of an assessee, a Hindu undivided family, who was a partner in a firm engaged in various businesses. The Income-tax Officer concluded that the assessee derived a benefit by utilizing overdrawn funds from the firm without paying interest, resulting in the inclusion of Rs. 24,885 as income under section 28(iv) of the Act. The Commissioner of Income-tax (Appeals) and the Appellate Tribunal upheld this decision, citing the utilization of "non-interest-bearing funds" by the assessee. However, subsequent assessments by the Tribunal for other years revealed that the non-interest-bearing funds available to the firm exceeded the borrowings made by partners, leading to the deletion of the addition to the assessee's income. The Tribunal's decision in the firm's case for the same assessment year contradicted the addition made to the assessee's income, as the disallowance was deleted due to the availability of non-interest-bearing funds exceeding borrowings. Income-tax Reference No. 299 of 1982: Similarly, in this case involving another Hindu undivided family as the assessee, the Tribunal upheld the inclusion of Rs. 51,320 in the income of the assessee under section 28(iv) of the Act. However, the subsequent findings in the firm's case for the same assessment year revealed that the non-interest-bearing funds available to the firm exceeded the borrowings made by partners, leading to the deletion of the addition to the assessee's income. The Tribunal's decision in the firm's case contradicted the applicability of section 28(iv) in the assessee's case. The court emphasized that section 28(iv) can only be invoked when the benefit or perquisite is other than cash, and if the benefit is in cash, the provision does not apply. Citing previous judgments, the court clarified that section 28(iv) applies only to non-cash benefits or perquisites. Consequently, the court ruled in favor of the assessees and against the Revenue, highlighting the importance of non-cash benefits in the application of section 28(iv) of the Income-tax Act, 1961.
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