COMMISSIONER OF INCOME TAX MADRAS Vs. T S PL P CHIDAMBARAM GHETTIAR DEAD

JUDGEMENT

(1.) , J.: The first of these two appeals (both by certificates) viz. that filed by the Commissioner of Income Tax succeeds and the second, that filed by the legal representatives of the assessee fails. The facts as found by the Tribunal and set out in the statement of the case, relevant for the purpose of these appeals are as follows:

(2.) THE relevant assesment year is 1944-45, corresponding to the accounting year ended on 12/04/1944. THE assessee is one Chidambaram Chettiar (since deceased). THE father of the assessee Palaniappa Chettiar was a money lender. He had made various advances to one Nallathambi Sakkarai Manradiar, who will hereinafter be referred to as the Pattayagar, a prominent landlord in Coimbatore District, on promissory notes. THE total principal advanced by the father of the assessee upto 6/07/1932 amounted to Rs. 1,38,535.00. THE interest on the same came to Rs. 1,34,965,.00. On 6/07/1932, a further advance of Rs. 2500/- was made to the Pattayagar and for the amounts due from him, the Pattayagar executed a mortgage of some of his properties in favour of the assessee's father for a sum of Rupees 2,76,000/-. Till 1938, only a sum of Rs. 13,620.00 was paid by the mortgagor in part payment of the debt due from him. On 14/12/1940 the mortgagee instituted a suit on the foot of the mortgage bond claiming a sum of Rs. 5,50,573.00 inclusive of principal and interest. On 19/09/1943, the claim was compromised and on 5/10/1943, a compromise decree was passed for a sum of Rs. 3,50,500.00 in full satisfaction of the mortgagee's claim. THE decree amount was made payable on cr before 1/10/1944. THE debt under the compromise decree was subsequently discharged.

(3.) THE High Court answered the first two questions against the assessee and the third question against the Department. THE legal representative of the assessee are challenging the High Court's decision on the first two questions and the Commissioner is challenging the High Court's decision on the third question.