9911796707
TMI Blog1979 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... question posed is to be formulated can be stated thus: The assessee is the managing director of the Karnal Distillery Company Ltd., Karnal, hereinafter referred to as the company. The assessee had a deposit with the said company of a sum of Rs. 1,74,639 as reflected in the credit balance to his account in the account books of the said company. On the instructions of the assessee, the said company in its books of account on April 3, 1962, showed the said amount to the credit of a partnership firm of M/s. Modern Property Dealers, Karnal, hereinafter referred to as the " firm ", which comprised of only three partners, namely, Sudhir Kumar Jaiswal and Arun Kumar Jaiswal, sons of the assessee, and Smt. Mina Jaiswal, daughter of the assessee, who were to share in equal share, that is, onethird each, the profits and losses of the said firm. In the books of account of the said firm, the said amount Was shown to the credit of the said three partners in equal shares. The said amount was also shown in the account books of the company to the debit of the assessee and no interest had, in fact, been received by the assessee from the company during the assessment years in question on the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st had, in fact, been received by him and he could not, in law, be forced to earn interest on that amount. The Tribunal distinguished its earlier decision pertaining to the assessment year 1963-64 on the ground that in that year the assessee had himself indicated his interest income first in the estimate of advance tax and later on in the first return that he filed and, therefore, the claim in the revised return that he earned no interest was considered an after thought and for that reason that interest amount in question was taxed in his hands. In the later years, the ITO and the AAC remained consistent and continued to tax the interest income of the kind in the hands of the assessee, while the Tribunal on its part continued to follow the ratio of its decision rendered in regard to the assessment year 1964-65, from which had arisen I.T.R. No. 98 of 1977. The Tribunal, however, in regard to all the assessment years starting from 1964-65, referred the matter for the opinion of this court under s. 256(1) of the Act, posing the identical question, as already mentioned. Before embarking upon the consideration of the question referred for our opinion, one additional fact pertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chambers' Twentieth Century Dictionary and the assessee quoted its meaning from Shorter Oxford English Dictionary. In the Chambers' Twentieth Century Dictionary, the word " loan " means anything lent, especially money at interest; the act of lending, the condition of being lent; an arrangement for lending; permission to use ". In the Shorter Oxford English Dictionary the word " loan " means a gift or grant from a superior; a thing lent; especially a sum of money lent for a time, to be returned in money or money's worth and usually at interest ........ ". In my opinion, the factum of advance carrying or not carrying any interest is not decisive of the fact as to whether the advance in question qualified to be called a loan or not. What is decisive is the circumstance as to whether the advance was made to meet some genuine need for a loan such as (without being exhaustive of the contingencies) to square up genuine antecedent debt, to float a genuine business adventure, or to meet genuinely felt need for food, shelter and clothing or to discharge social obligations such as performing of marriage, etc. Testing on the touchstone of the above requirements, the advance in question ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case would squarely fall within the four corners of s. 61 of the Act which envisages that all income arising to any person by virtue of revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income. The learned Tribunal appeared to be greatly vexed by the fact that the revenue had accepted the wealth-tax return of the assessee showing the said amount as part of his wealth and the wealth-tax returns of the loanees who claimed deduction to the extent of the said credits advanced to them by the assessee, and also further by the circumstance that the revenue had already taxed the said interest income in the hands of the said major children and the wife of the assessee. In my opinion, there was no cause for getting worked up on account of the aforesaid reasons, for, the orders of the taxing authorities cannot be labelled as inconsistent. Since the assessee retained ownership in the assets in question, obviously he was justified to show the said assets as part of his own property and similarly, his family members were also justified in showing in their wealthtax re turns that the amount in question did not belon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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