High Court Of Rajasthan : Jaipur Bench
CIT vs. Heeralal Chaganlal Tank
Sections 40(b), 68
Y.R. Meena & A.C. Goyal, JJ.
IT Ref. No. 126 of 1981
8th January, 2002
Counsel Appeared
J.K. Singhi, for the Revenue
ORDER
BY THE COURT :
On an application under s. 256(1) of the IT Act, 1961 (‘the Act’), the Tribunal has referred the following questions for the opinion of this Court : “(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the cash credit of Rs. 10,000 in the name of Shri Phool Chand Jain and interest of Rs. 900 thereon? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the interest of Rs. 5,851 disallowed by the ITO as interest paid to partner?”
The fact regarding question No. 1 is that the assessee has not (sic) shown the cash credit of Rs. 10,000 from Phool Chand Jain. His submissions were recorded. He has confirmed the loan advanced to the assessee. Phool Chand Jain has retired as Asstt. STO. His identity is not in dispute. The cash credit was disbelieved on the ground that Phool Chand could not establish the sale of ornaments to advance an amount of Rs. 10,000 to the assessee. Whether Rs. 10,000 was advanced by Phool Chand to the assessee or not, is basically a question of fact and the Tribunal is a final fact-finding body. The fact that Rs. 10,000 have been advanced by Phool Chand to the assessee. The identity of the creditor is established. The cash creditor has confirmed the loan. In these facts and circumstances, it cannot be said that the finding of the Tribunal is perverse.
The fact regarding issue in the second question that amount of Rs. 5,851 has been paid to Raj Roop Kirtichand Tak, the finding of the Tribunal is that Raj Roop Kirtichand Tak is not a partner and if the amount of deposit made with the firm though by the same person but in different capacity, that cannot be treated as advance by the partner to the firm. If the partner has different capacity and deposited some amount with the firm in different capacity that is other than the partner, then that interest payment to the person who is not partner, that payment cannot be treated as payment of interest to the partner and that does not hit the provisions of s. 40(b) of the Act.
In the result, the answer to the questions is in affirmative, i.e., in favour of the assessee and against the Revenue. The reference be made accordingly.
[Citation : 257 ITR 281]
