1995 (11) TMI 118 - AT - Income Tax

Summary

Issues Involved:
1. Assessment of Smt. Bhartiben Ghanshyambhai on a protective basis and clubbing of income from Rupa Textile Engineers in the hands of her husband, Shri Ghanshyambhai R. Thakkar.
2. Deletion of Rs. 60,000 as bad debt in the case of Shri G.R. Thakkar.

Summary:

Issue 1: Assessment of Smt. Bhartiben Ghanshyambhai and Clubbing of Income
In ITA No. 4060/Ahd/1990, the matter pertains to the assessment of Smt. Bhartiben Ghanshyambhai (B.G. Thakkar) on a protective basis and clubbing of income from Rupa Textile Engineers ('Rupa') in the hands of her husband, Shri Ghanshyambhai R. Thakkar (G.R. Thakkar). The AO conducted a survey operation u/s 133A at the office premises and found that G.R. Thakkar was managing the business of Rupa, although it was in the name of his wife. Both Smt. B.G. Thakkar and G.R. Thakkar admitted that the business activities were managed by G.R. Thakkar and agreed to club the income from Rupa in his hands. However, the Dy. CIT(A) reversed the AO's decision and directed the assessment of Smt. B.G. Thakkar on a substantive basis. The Tribunal upheld the Dy. CIT(A)'s order, noting that the business of Rupa was genuine and had been assessed as such in previous years. The Tribunal found that Smt. B.G. Thakkar was the real owner of Rupa and not her husband, thus making the clubbing of income unjustified.

Issue 2: Deletion of Rs. 60,000 as Bad Debt
In ITA No. 4059/Ahd/1990, concerning Shri G.R. Thakkar, the AO had clubbed Rs. 29,910 as income from Rupa in his hands, which the Dy. CIT(A) deleted, holding that Smt. B.G. Thakkar was the real owner of Rupa. Consistent with the decision in ITA No. 4060/Ahd/1990, the Tribunal upheld the Dy. CIT(A)'s decision. Additionally, the AO had disallowed Rs. 60,000 as bad debt due to lack of details. However, the Dy. CIT(A) deleted this addition after examining the details and finding that the debt pertained to M/s Indequip Engineering Ltd., which had gone into liquidation. The Tribunal upheld the Dy. CIT(A)'s order, finding it justified.

Conclusion:
Both appeals by the Revenue were dismissed, upholding the Dy. CIT(A)'s orders in favor of Smt. B.G. Thakkar and Shri G.R. Thakkar.