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TMI Blog2002 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... e negative, i.e., in favour of the Department and against the assessee. - - - - - Dated:- 11-12-2002 - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by S.H. KAPADIA J. - The above three appeals raise a common question of fact and law and, therefore, they are taken up together for hearing and final disposal. They are filed by the Department. They are for the assessment years 1989-90, 1990-91 and 1991-92. For the sake of convenience, the facts in Appeal No. 1318 of 2000 are required to be stated. In all the three appeals, the following question of law arises for determination: "Whether the Tribunal was right in holding that interest income earned by the assessee was taxable under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer concluded that the assessee was carrying on business for profits and gains. That, the expenses claimed were generally claimed in the business income. Therefore, the Assessing Officer calculated the tax at the maximum marginal rate in accordance with section 161(1A). Being aggrieved, the assessee carried the matter in appeal to the Commissioner of Income-tax (Appeals). It was argued on behalf of the assessee that the loans taken by the assessee were from the beneficiaries of the trust. That, these beneficiaries were also family members. That, the amounts received were invested in the firms in which the family members of the beneficiaries were the partners. That, the trustees of the trust had invested the amount without an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust was already invested by the beneficiaries in respective family concerns. That, loans were taken from the beneficiaries of the trust, who were also family b members and the amounts received were invested in the concerns in which the family members of the beneficiaries were partners. That, the expenses were in the nature of business expenses. Therefore, the Assessing Officer was right in coming to the conclusion that the entire device was created to avail of the cheaper tax rate. Mr. Porwal, learned counsel appearing on behalf of the assessee, on the other hand contended that the trust acted like a clearing house. That, loans were taken from minors and beneficiaries and family friends and they were passed on to the firms in which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners. There is no explanation as to why the trust created M/s. J.K. Holdings as a separate taxable entity if the assessee had no intention of carrying out the business. Even the expenses claimed were similar to expenses claimable under section 28 to section 44 of the Income-tax Act. Therefore, the Assessing Officer was right in coming to the conclusion that the loans were not proved for want of identity of creditors. There is no evidence regarding the capacity of persons to advance monies to the assessee. The Assessing Officer was right in coming to the conclusion that even the genuineness of the transaction is not proved. Therefore, the Assessing Officer was right in coming to the conclusion that the assessee's income from undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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