1994 (1) TMI 48

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....elating to this reference are as follows: The assessee is a Hindu undivided family. The "karta" of the family made a gift of Rs. 1,00,000 on October 11, 1960, to his nephew. The Income tax Officer came to know that in an appellate order for the earlier years, it had been held that the gift was void. Consequently, he came to the conclusion that the income attributable to this sum of Rs. 1,00,000....

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....e facts on record, that it would be reasonable to assess the actual interest earned on the amount which was lying as a deposit with a firm, and if such information was not available, to estimate the interest at a simple rate of interest instead of at a compound rate of interest. The assessee required the Tribunal to state the following common questions of law : "1. Whether, on the facts and in ....

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....stimating the rate of interest at 9 per cent. for 1971-72 and at 12 per cent. for 1972-73, 1973-74 and 1974-75 ?" While referring the questions, the Appellate Tribunal had stated that the question whether the amount was irrecoverable had not been argued before the Tribunal. Before us, learned counsel for the assessee argued that such a question arises from the facts found by the Tribunal, an....

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.... of the finding that the gift was void. Once the gift is void, the donee stands in the position of a trustee and is accountable to the donor for the income derived from the amount, as he will be holding it on behalf of the donor. That is the reason why the Appellate Tribunal has given a direction that the actual interest earned by the donee should be treated as income and should be assessed as acc....