1979 (1) TMI 132 - AT - Income Tax

Summary

Issues Involved:
1. Inclusion of interest income of Rs. 920 on speculative profit of Rs. 9,200 earned in 1965.
2. Determination of the real ownership of the speculative profit.
3. Validity of the speculative transaction entered into by Shri Nar Hari Dalmia on behalf of his minor daughter.
4. Applicability of the decision of the Calcutta Bench of the Tribunal in the case of B.K. Birla.

Detailed Analysis:

1. Inclusion of Interest Income of Rs. 920 on Speculative Profit of Rs. 9,200 Earned in 1965:
The primary issue in this appeal is the inclusion of Rs. 920 as interest income derived from a speculative profit of Rs. 9,200 earned in 1965. The assessee contends that this amount should not be included in his income based on a precedent set by the Calcutta Bench of the Tribunal in the case of B.K. Birla. However, the Tribunal upheld the inclusion of this interest income in the assessee's total income for the assessment year 1975-76, as the facts remained consistent with previous years where similar conclusions were reached.

2. Determination of the Real Ownership of the Speculative Profit:
The Tribunal examined the circumstances under which the speculative profit was earned. It was found that Shri Nar Hari Dalmia entered into the transaction ostensibly on behalf of his minor daughter, Kumari Archana. However, the Tribunal concluded that the income from the transaction in the name of Kumari Archana actually belonged to Shri Nar Hari Dalmia. This conclusion was based on the fact that Archana did not have sufficient funds to justify the transaction, and the brokers did not take security, indicating they considered the transaction to be on behalf of Shri Nar Hari Dalmia.

3. Validity of the Speculative Transaction Entered into by Shri Nar Hari Dalmia on Behalf of His Minor Daughter:
The Tribunal held that the speculative transaction could not have been reasonably undertaken by Shri Nar Hari Dalmia on behalf of his minor daughter. It was determined that a prudent businessman would not enter into such a speculative transaction on behalf of a minor, and the brokers would not have accepted it as such. The Tribunal emphasized that the transaction was a benami transaction, with the real risk and ownership lying with Shri Nar Hari Dalmia, not his minor daughter.

4. Applicability of the Decision of the Calcutta Bench of the Tribunal in the Case of B.K. Birla:
The assessee relied on the decision of the Calcutta Bench in the case of B.K. Birla, where a similar speculative transaction in the name of a minor was treated as the minor's income. However, the Tribunal distinguished this case on facts, noting that the circumstances in B.K. Birla were different. In B.K. Birla, the credit balance and the basis of addition by the ITO were not the same as in the present case. Therefore, the Tribunal found that the assessee could not derive assistance from the Calcutta Bench's decision.

Conclusion:
The Tribunal concluded that the speculative profit of Rs. 9,200 belonged to Shri Nar Hari Dalmia and not to his minor daughter, Kumari Archana. Consequently, the interest income of Rs. 920 derived from this profit was rightly included in the assessee's total income for the assessment year 1975-76. The appeal was dismissed, affirming the decisions of the lower authorities.