1984 (1) TMI 141

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.... Gurdial Singh and Jeet Singh had purchased house No. 10-C, Sriganganagar in the accounting period relevant to the asst. yr. 1962-63 for a consideration of Rs. 80,000, each paying Rs. 20,000. At the relevant time S/Shri Gurdial singh and Jeet Singh were minors. The ITO observed that the assessee and his major son Shri Bhagat Singh were partners in the firm M/s Sant Ram Bhagat Singh from where each of them had withdrawn Rs. 20,000. However, so far as the two minor sons of the assessee were concerned, the assessee arranged for them loans of Rs. 20,000 each from the same firm i.e. M/s Sant Ram Bhagat Singh. For the asst. yr. 1962-63, the ITO included the share income from the above property in relation to the two minor sons in the income of th....

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....rt of this contention copies of their accounts in different firms have been filed in evidence. The ld. counsel for the assessee also referred to s. 8 of the Hindu Minority & Guardianship Act and submitted that there is no legal bar raising loans on behalf of minors so long as they were for the benefit of the minors. He also pointed out that the revenue has no where pointed out that these loans raised by their natural guardian were disadvantageous to the minors. He also contended that they had become major and, therefore, the provisions of s. 27(1) of the IT Act were not applicable. He also submitted that the ITO had already accepted the position and made separate assessments from the asst. yr. 1972-73 onwards and it was not open to the ITO ....

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....coming major the two sons had "re-paid" the balance of loan to the appellant is of not much consequence." From the above observations by the AAC it is clear that the fact of re-payment by the two sons of the assessee was very much before her. She did not controvert the same but decided the issue against the assessee on legal ground i.e. deemed ownership in view of the provisions contained in s. 27 (1) of the IT Act. We are not inclined to agree with the above views held by the authorities below. In the present case, undoubtedly the two sons of the assessee have re-paid the loans out of their own funds and not out of the income earned from the said property. Even if the payment was made out of the income of the said property, it would not ha....