COMMISSIONER OF INCOME TAX Vs. M VINODA RAO

JUDGEMENT

(1.) THE two questions referred in I.T.R.Cs. Nos. 45 to 65 of 1989, under section 256(2) of the Income-tax Act ("the Act" for short), pertain to the assessment years 1977-78 to 1980-81, they read as follows :

(2.) THE three question referred in I.T.R.C. No. 23 of 1990 pertain to the assessment year 1981-82 and they are as follows :

(3.) THE Commissioner (Appeals), after stating the facts above referred to, held that no disallowance was permissible, by his order dated March 8, 1984, in the case of the firm. In the case of each of the partners, for the assessment years 1977-78, 1978-79 and 1979-80, the Income-tax Officer had made reassessments under section 147 and included similar interest amounts. For the assessment year 1980-81, the amount was included in the original assessment itself. Each of the partners appealed and the Commissioner (Appeals) passed orders on March 15, 1984, deleting the additions. THE contentions of the Revenue before the Appellate Tribunal were that (a) a loan transaction is a transfer within the meaning of section 64(1)(vii) so that the income accruing therefrom was to be taken as the income of the partner himself, (b) under section 64(2), the income accruing to the joint family should be deemed to have accrued to the partner, (c) in the alternative, the loan was not a transfer at all so that the income accruing to the wives, minor children and joint families should be deemed to be the income of the partners under section 64(1)/ section 60 and (d) consequently, section 40(b) applied to the facts of the case and the income which accrued or should be deemed to have accrued to the partner should be added to the income of the partner and consequently should be disallowed in computing the total income of the firm. THE Tribunal observed that in the case of one of the partners, M. Ananda Rao, the matter had come up to the Tribunal for the assessment years 1969-70 and 1970-71 and the Tribunal in I.T.A. Nos. 415 and 416/Bang/1971-72 dated August 1, 1972, had rejected all the contentions of the Revenue and that order had become final. THE Tribunal, therefore, was of the opinion that there was no need to differ from the same. THE Tribunal also held that the contentions of the Revenue were not tenable in any view of the matter. All the appeals of the Revenue were dismissed.