- (1.) ON March 13, 1967, the assessee, New Suraj Financiers and Chit Fund Co. Pvt. Ltd. , purchased 3/4ths share in a building in Delhi, and, thereafter, let it out to its sister concern, New Suraj Transport Co. (P.) Ltd. , at a rent of Rs. 1,800 per month. Later, by a book entry, the assessee sold its share in the building on November 25, 1969, to its sister concern for a sum of Rs. 1,29,450. In actual fact, no money was paid by the sister concern to the assessee as this sum of Rs. 1,29,450 continued with the sister concern but was thereafter shown as a loan advanced to it by the assessee on which interest at the rate of 1% per month was payable with effect from November 25, 1969.
(2.) THE Income-tax Officer, in dealing with the assessment year 1971-72, held that as the transfer of the share in the building by the assessee to its sister concern had not been made by a registered sale deed, no transfer thereof would be deemed to have been made by it. The assessee was, accordingly, treated as the owner of the building and a sum of Rs. 18,000 was added towards the total income of the assessee on the basis of the notional use of this building. At the same time, the Income-tax Officer also included a further sum of Rs. 15,534 being the interest payable to it on the sale consideration of Rs. 1,29,450 for this building. This order was upheld both by the Appellate Assistant Commissioner on appeal and by the Tribunal on further appeal.
(3.) IN these circumstances, the following question of law has been referred to this court for opinion : "whether, on the facts and circumstances of the case, when income from property has been separately assessed and no loan, in cash, has been advanced by the assessee to New Suraj Transport Co. (P.) Ltd. and only transfer entries has been passed whereby New Suraj Transport Co. (P.) Ltd. has been debited by the assessee with Rs. 1,29,450 representing the sale consideration of the property in question sold as per sale deed dated April 25, 1974, Rs. 15,534 assessed under the head 'interest' could be legally assessed as income of the assessee ?";