MALIK, C.J. - (1.) THE assessee Raghunath Prasad was assessed to income-tax and excess profits tax for the year 1945-46. He made an application for a reference under section 66(1) of the Indian Income-tax Act and the Tribunal referred to us two questions for decision which were as follows : 1. Whether in the circumstances of the case, the loss of Rs. 4,483 was an allowable loss having regard to proviso to section 24(1) of the Income-tax Act ?
(2.) WHETHER in the circumstances of the case, the litigation expenses amounting to Rs. 6,338 represented admissible business expenditure under section 10(2) (xii) now (xv) of the Income-tax Act ? The assessee filed an application that there were certain other questions of law that arose for decision which should have been referred to us. By our order dated the 29th of October, 1952, we directed that further questions of law which arose in the case should be referred to us for decision and in compliance with the order two other questions that have been referred are as follows :- (a) Whether on the facts and circumstances of this case after the partial partition had taken place in the Hindu undivided family, the two members Ram Sarup and Radhey Lal continued to carry on the business of money-lending although no fresh loan was advanced by them but only they took steps to realise these loans along with interest due on them ? (b) Whether on the facts and in the circumstances of this case the amount of Rs. 15,612 in the hands of the assessee is income taxable under the Indian Income-tax Act ? The facts though not fully set out in the original statement of the case now appear from the fresh statement made by the Tribunal. Makkhan Lal, grandfather of the assessee, had a number of business. He had three sons, Ram Sarup, Narain Das and Radhey Lal. Narain Das predeceased him leaving an adopted son Amar Nath. Makkhan Lal in his lifetime gave Amar Nath certain assets with which Amar Nath started his separate business and we are no longer concerned with him. On the death of Makkhan Lal his two business, one in cloth and the other in grain, and the five mortgage loans advanced by him to Pyare Lal Anandi Lal, Jogendra Pal Singh, Har Prasad Baijnath, Lachhman Das Karorimal Basdeo, Ram Sarup and Lallamal Hardeodas came under his will to his two surviving sons.
(3.) THE two business in cloth and grain were continued by Ramsarup and Radhey Lal but they did not carry on any further money-lending business. On the 25th of August, 1935, there was a partial partition between Ramsarup and Radheylal; Ram Sarup was given the cloth business while Radhey Lal was given the grain business. The five mortgage debts were, however, kept joint and it was agreed between the two brothers that when the money was realised it would be divided between them half and half.;