High Court Of Delhi
CIT vs. G.K. Chadha
Sections 4, 36(1)(iii), 37(1)
Asst. Year 1971-72, 1972-73, 1973-74, 1974-75
Arijit Pasayat, C.J. & D.K. Jain, J.
IT Ref. Nos. 148, 187, 188 & 305 of 1981
31st January, 2001
R.C. Pandey & R.D. Jolly with Mrs. Prem Lata Bansal, for the Revenue : C.S. Aggarwal with Salil Aggarwal, for the Assessee
ARIJIT PASAYAT, C.J. :
Heard. All these reference applications are inter-linked in the sense that they relate to the same assessee and the dispute revolves round the allowability of interest to the Hindu Undivided Family (for short the ‘HUF’) of the assessee. The references have been made under s. 256(1) of the IT Act, 1961 (in short the ‘Act’). So far as asst. yrs. 1971-72, 1972-73 (IT Ref. Nos. 187-88/81) and 1973-74 (IT Ref. 148/81) are concerned, the Revenue is in reference against Tribunal’s decision that interest was allowable as expenditure both under s. 36(1)(iii) and s. 37 of the Act. So far as these references are concerned, Revenue’s stand is that on the death of Shri B.N. Chadha his son, i.e., the assessee could not have constituted an HUF. We find that there was no dispute by the Revenue before the Tribunal on the point that w.e.f. 31st Dec., 1969, the capital account standing in the name of G.K. Chadha (HUF) was the property of his HUF. The only ground on which allowance of interest was objected to was the absence of any specific agreement for paying such interest.
2. Though learned counsel for the Revenue submitted that on the death of Shri B.N. Chadha, his son could not have constituted an HUF, that is not an acceptable stand because on or before 31st Dec., 1969, an individual could impress his individual property with the characteristic of an HUF by the act of blending. As is fairly well settled, no specific or particular mode of blending is provided for in the statute. That being the situation, we find no substance, in the plea of learned counsel for the Revenue that there was no existence of any HUF and, therefore, the question of paying any interest did not arise. So far as the absence of any agreement is concerned, Tribunal has referred to various factual aspects to conclude that even in the absence of such a specific agreement or contract, demand/payment of interest by the concerned parties could be provided for. These conclusions are factual in nature giving rise to no question of law. Accordingly we decline to answer the questions which have been referred at the instance of Revenue. So far as asst. yr. 1974-75 (IT Ref. No. 305/81) is concerned, Revenue had also sought for reference on identical question of allowability of interest. In view of our conclusions for the earlier three years, the question referred is not answered. So far as assessee’s reference (IT Ref. No. 304/81) is concerned, it relates to the rate of interest. What would be the appropriate rate of interest is essentially a factual aspect giving rise to no question of law. We, therefore, decline to answer the question which has been referred at the instance of assessee.
All the reference applications are accordingly disposed of.
[Citation : 252 ITR 617]