POKHRAJ HIRACHAND Vs. COMMISSIONER OF INCOME TAX
LAWS(BOM)-1962-9-10
HIGH COURT OF BOMBAY
Decided on September 19,1962

POKHRAJ HIRACHAND Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents


Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. CALCUTTA DISCOUNT CO LTD [LAWS(CAL)-1969-7-31] [REFERRED TO]
IBRAHIM HAJI P VS. COMMISSIONER OF WEALTH TAX [LAWS(KER)-1997-10-23] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. P RAJENDRAN [LAWS(KER)-1980-6-13] [REFERRED TO]
M/S. BHARAT BIOTECH INTERNATIONAL LTD. VS. THE DCIT [LAWS(IT)-2014-5-124] [REFERRED TO]
FIDELITY BUSINESS SERVICES INDIA PVT LTD VS. ASSISTANT COMMISSIONER OF INCOME- TAX [LAWS(KAR)-2018-7-88] [REFERRED TO]


JUDGEMENT

Y.S.TAMBE, J. - (1.)ON a direction given by this Court under Sub -S. (2) of S. 66 of the Indian IT Act, the Tribunal has drawn up the statement of the case, raising the following two questions:
"(1) Whether the Tribunal exceeded its power under S. 33(4) of the Indian IT Act in disallowing the claim of the petitioner to the extent of Rs. 1,13,000 (rupees one lakh thirteen thousand) on the ground that the said amount was not paid by the petitioner ? (2) Whether there was any evidence on record to support the finding of the Tribunal that the petitioner had paid to Milkhiram Rs. 1,87,000 (rupees one lakh eighty seven thousand) and not Rs. 3,00,000 (rupees three lakhs) ?"

(2.)IN our view, it would not be necessary to answer the second question inasmuch as our answer to the first question would be sufficient for the disposal of the reference in favour of the assessee.
We are here concerned with the asst. year 1948 -49. The assessee is a partnership firm consisting of six partners dealing in cloth and parachutes. One Milkhiram R. Goyal, who was carrying on business as the sole proprietor under the name and style of Milkhiram Brothers, was able to secure a contract for purchase of approximately 1,28,499 parachutes from Tata Aircraft Ltd., at the price of Rs. 93 -1/2 lakhs on or about 1st Nov., 1946. On or about 13th Nov., 1946, Milkhiram assigned to the assessee the benefits of the said contract of purchase of the parachutes. The terms of the agreement of the aforesaid transfer between the assessee and Milkhiram are contained in a letter addressed to the assessee by Milkhiram, and it is annexed as Annexure 'A'. Now, Milkhiram assigned to the assessee the benefits of the said contract of purchase of parachutes for a consideration of Rs. 3 lakhs. The assessee paid Milkhiram the sum of Rs. 3 lakhs by passing in his favour two cheques. Milkhiram passed receipt in favour of the assessee for the said amount of Rs. 3 lakhs. According to the assessee, though he had issued two cheques in favour of Milkhiram towards the payment of the said sum of Rs. 3 lakhs, at the request of Milkhiram, the said amount was not paid by cheques, but was paid in cash, and this fact also is admitted by Milkhiram in his own handwriting in the form of an endorsement on the reverse of the said two cheques. Copies of the cheques along with the endorsements in the handwriting of Milkhiram forming part of the case are annexed as Annexure 'B'.

(3.)THE assessee filed a voluntary return of his income for the aforesaid asst. year 1948 -49. The income shown by him in the return amounted to Rs. 8,12,000. In the computation of the said amount as his income, the assessee had deducted Rs. 3 lakhs. Apart from the aforesaid receipts passed in his favour by Milkhiram, the assessee filed also an affidavit before the ITO, stating the facts regarding payment by him of Rs. 3 lakhs to Milkhiram, in support of his claim that he had paid Rs. 3 lakhs to Milkhiram and that it was a revenue expenditure. In the assessment order the ITO observed that he was not satisfied whether the expenditure of Rs. 3 lakhs has been incurred by the assessee at all. He further held that even if the assessee had paid any amount to Milkhiram, it was not an expenditure relating to the business of the assessee but was of a capital nature. The relevant portion of the order is in the following terms:
"In view of all these facts, I am not satisfied whether expenditure of Rs. 3 lakhs has been incurred at all. I hold that the amount paid, if any, is not only of a capital nature but also not an expenditure relating to the business of my assessee. I therefore add back the amount of Rs. 3 lakhs debited to the profit and loss account."



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