TaxTMI 
TaxTMI 
1997 (3) TMI 4
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....tances of the case, the add back of Rs. 15,814 is justified in law ?" The assessee is the managing director of the Karnal Distillery Company Limited, Karnal. As per the books of account of the company, the said assessee had a deposit of Rs. 1,74,639 on April 3, 1962. The aforesaid amount was debited to the credit of Modern Property Dealers, Karnal, the partnership firm consisting of two sons and a daughter of the assessee. The said partners had a 1/3rd share each in the partnership. The aforesaid amount was shown to the credit of the three partners in equal shares in the books of account of Modern Property Dealers. On April 1, 1963, the aforesaid amount was shown in the accounts of Modern Property Dealers to have been returned to the assessee and further on the very same day it was also shown that the assessee gave the said amount as loan equally to the three partners of the Modern Property Dealers. During the assessment year 1963-64, the assessee had shown the interest derived from the aforesaid so-called loan amount in his return but later on a revised return was filed deleting the aforesaid amount. The Assessing Officer, however, came to the conclusion that the interest deriv....
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....e, the assessee has moved this court. The assessee appeared in person and ably argued his case. The assessee contended that the transaction in question having been held to be a loan by the Appellate Tribunal and the said conclusion being on a question of fact, it was not open to the High Court on a reference being made to interfere with that conclusion on a question of fact. The assessee also further contended that any father is entitled to give a loan to his children if the children want to carry on any business even without charging any interest from them and in such an event the income accruing from such loan amount cannot be taxed in the hands of the father and the High Court was wholly in error in coming to the conclusion that it was not a case of genuine loan on the ground that no interest had been charged. The assessee further urged that the amount in question having been debited from the accounts of Modern Property Dealers and thereafter the assessee having given the same to the partners of the said Modern Property Dealers and the said amount ultimately having been refunded to the assessee, the High Court erred in holding that it was not a loan transaction. Mr. Ramamu....
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.... : "That the High Court was in error in re-examining the fact and in coming to the conclusion that the investment made by the assessee was not connected with the orders placed by the Government with the assessee and, therefore, the loss was a capital loss." In that case the Tribunal on consideration of the sequence of events and the close proximity of the investment made by the assessee with the receipt of Government order for motor vehicles, had come to the conclusion that the investment was made to further the sales of the assessee and boost his business and that the investment was made by way of commercial expediency and as such the loss which occurred was a revenue loss. But the High Court had interfered with that conclusion, and, therefore, this court had observed that since the question referred to the High Court was framed on the assumption that it had to be decided in the factual matrix delineated by the Tribunal, the High Court was wrong in re-appreciating the evidence. The assessee also relied upon the decision of this court in the case of CIT v. S. Raghbir Singh [1965] 57 ITR 408, wherein the question for consideration was whether the assessee who had created a ....
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.... must be proximate as observed in Prem Bhai Parekh's case [1970] 77 ITR 27 (SC). But in the case on hand we are not really concerned with section 64(1) of the Act and the case is, therefore, of no direct assistance. The assessee in the course of his argument had also contended that the interest income which the children derived from the amount of loan transaction in their favour have already been taxed in their hands, and, therefore, the same cannot be taxed twice. Mr. Ramamurthi, however, repelling the aforesaid contention, had urged that under the Income-tax Act the Assessing Officer has the right to tax the right person, namely, the person who is liable to be taxed according to law with respect to a particular income and merely because a wrong person has been taxed with respect to a particular income the Assessing Officer is not precluded from taxing the right person with respect to that income. In this connection, he placed reliance on the observation of this court in the case of ITO v. Ch. Atchaiah [1996] 218 ITR 239, wherein this court observed as under : "We are of the opinion that under the present Act, the Income-tax Officer has no option like the one he had under th....