Sen, J. - (1.) The Tribunal referred the following questions of law of the Gujarat High Court at the instance of the assessee :-"(1) Whether on the facts and in the circumstances of the case and particularly in view of the facts that : (a) on partial partition of the HUF the assessee received not only assets but also certain liabilities of the HUF and (b) the income from the assets received on the partition had been considered in computing the total income of the assessee, the Tribunal was right in holding that a part of the interest in respect of amounts due to unsecured creditors should not be allowed either by way of an overriding title or otherwise (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that such interest as was disallowed was not admissible deduction u/S. 12(2) of the IIT Act, 1922 (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the said interest should not be taken into account while determining the real income of the appellant -
(2.) The relevant years of assessment were 1951-52, 1952-53 and 1954-55 to 1961-62. The High Court answered questions Nos. 1 and 2 in favour of the assessee and against the Revenue.
(3.) The facts of the case as recorded by the Tribunal in its appellate order dated 22-11-1972 were as follows. Sir Chinubhai Madhavlal had filed a suit in the High Court of Bombay in 1948 against his three sons, Udayan Chinubhai, Kirtidev Chinubhai, Achyut Chinubhai and his wife Lady Tanumati Chinubhai and also his mother Lady Sulochana Chinubhai claiming severance of the joint status of the undivided Joint Hindu Family of the plaintiff and the defendants. The family had considerable movable and immovable properties. There were also various debts and liabilities of Sir Chinubhai who was the Karta of the joint family. Some debts were also incurred by Udayan Ciunubhai and Lady Tanumati for maintenance and support and/ or education of some of the defendants. With a view to settle these disputes and differences between the parties, Shri K. M. Munshi, Advocate was appointed sole arbitiator. A direction was given by the Court that the defendants will not be permitted to challenge the debts and liabilities as Avyavaharic or illegal or incurred for illegal or immoral purposes. In other words, the defendants will not be entitled to say that these debts were not payable by and binding on the joint family. The Court also directed that Shri Munshi should ascertain and determine the debts, liabilities, claims and demands which were binding on the joint family and also determine whether any of these debts and liabilities etc. were to be taken over by the defendants. The Court further directed that as far as practicable, Shri Munshi would allot to the plaintiffs and also to the defendants such debts, liabilities, claims and demands as related to the properties and businesses coming to the respective shares of the parties.;