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TMI Blog1972 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... inghania, L. Lakshmipat Singhania and L. Kailashpat Singhania or it consisted of the said Jageshwar Prasad Agarwal and the three trustees of the Kamla Town Trust ? (2) Whether the finding of the Tribunal to the effect that the assessee was not entitled to the deduction of lease money paid to Sir Padampat Singhania, L. Kailashpat Singhania and L. Lakshmipat Singhania as business expenditure was correct in law ? (3) Whether the finding of the Tribunal refusing exemption to the assessee from business profits tax on the 25 annas share of the trustees of the Kamla Town Trust is correct in law ? (4) Whether, under the provisions of section 10(2)(vi), proviso (b), of the Income-tax Act, the unabsorbed depreciation of the unregistered firm in 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to appear that the trust was doing business, although, in fact, the same was conducted by the three Singhania brothers in their individual capacity. In other words, the finding recorded by the Tribunal was that, although on paper it was the trust which was doing the business, in fact, it was the three Singhania brothers who were doing business for themselves. For this purpose, the Tribunal relied upon a number of circumstances. The Tribunal noticed that the three Singhania brothers, who were the three trustees, were in a position to manage the affairs of the trust in any manner that they liked. They made the trust to retire from a firm called J. K. Bankers in Samvat 2002, and gave a donation of Rs. 50,000 to the trust. This donation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners. According to the Tribunal, all these facts indicated that the transaction of partnership between the trust and J. P. Agarwal was a mere camouflage and the business of the firm was, in fact, being conducted by the original partners and not by the Kamla Town Trust. The Tribunal also noticed that, according to the release deed dated 15th January, 1946, by which the three Singhania brothers retired from the firm, it was mentioned that a balance-sheet as on 31st December, 1945, had been prepared and that the same had been accepted by the parties concerned. The record showed that the assessee filed its return for the year in question on 4th November, 1946, that is, about 10 months after the release deed. During this long interval, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three trustees of the Kamla Town Trust were not partners in this firm. Learned counsel for both the parties are agreed that in view of our answer to the first question, questions Nos. 2 and 3 are merely consequential and have to be answered in the affirmative and against the assessee. Question No. 4 is relevant only for the assessment year 1950-51. For the previous assessment year 1949-50, the firm had been allowed an unabsorbed depreciation loss of Rs. 43,963. The assessee-firm claimed a set-off thereof in the assessment year 1950-51. The Tribunal refused to grant this set-off on the view that in the year 1949-50, the assessee-firm was an unregistered firm while it had been registered under the Income-tax Act for the year 1950-51. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars." The proviso deals with every assessee. It specifies that where the assessee is a registered firm then in the assessment of its partners if full effect cannot be given to any depreciation allowance and where the assessee is an unregistered firm where there is no question of its partners being assessed, the depreciation which can be carried forward is the unabsorbed depreciation in the assessment of the firm itself. The assessee in the first year being an unregistered firm is entitled to the carry forward of the unabsorbed depreciation under this provision. There is nothing in this section to deprive an unregistered firm of the benefit of the carry-forward simply on the ground that in the next year the firm is registered under the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein. Such a conditional gift by the three Singhania brothers in favour of a trust, which was exclusively being managed by them, was in the context of the other fact a bogus transaction. In the assessee's assessment for the previous year, namely, 1947-48, the Tribunal had come to a similar finding, the material portions whereof are quoted above. This court held that the finding was not liable to interference. The Tribunal has drawn inferences which it was competent to do. The same position obtains in the present case. Question No. 5 related not only to the sum of Rs. 1,50,000 which was credited in the name of the trust but also to a sum of Rs. 20,48,828 which stood in the books of the assessee firm as the balance of the share of profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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