COMMISSIONER OF INCOME TAX Vs. MRIDU HARI DALMIA

JUDGEMENT

(1.) This income tox reference at the instance of the Commissioner of Income-tax raises an interesting question. It arises out of the assessment of Shri Mirdu Hari Dalmia (hereinafter referred to as 'the father') for the assessment year 1970-71, the corresponding previous year which ended on 31-3-1970.

(2.) While completing the assessment of the. father for the assessment year in question, the Income-tax Officer noticed that a sum of Rs. 3,542 had been earned by way of interest on a deposit of Rs. 40,0001- made with Industrial Credit Company Ltd. (ICC for short) in the name of the assessee's minor son Gaurav Dalmia (hereinafter referred to as 'the minor son'). There was an account of the minor in the books of the father. This showed various amounts as having been advanced by the- father to the minor son from time to time. The father had issued cheques in favour of the minor son as follows: <FRM>JUDGEMENT_183_ILR(DEL)1_1982Html1.htm</FRM> sum of Rs. 26,000.00 had been shown as returned by the minor son on 3-9-1969, leaving a balance of Rs. 48,000.00 , as remaining due from the minor son to the father as on 31-3-70. These cheques were immediately deposited in an account in the name of the minor son with Dena Bank Ltd. Cheques in favour of ICC were made out on this bank account as below : <FRM>JUDGEMENT_183_ILR(DEL)1_1982Html2.htm</FRM> The following amounts had been received back from the ICC : <FRM>JUDGEMENT_183_ILR(DEL)1_1982Html3.htm</FRM>

(3.) It will be seen that the deposit of Rs. 30,000.00 with the ICC had been made out of the sum of Rs. 37,000.00 given by the assessee; the deposit of Rs. 14,000.00 on 7-5-1969 included the sum of Rs'. 13,0001- given by the assessee; the sum of Rs. 21.000.00 had been deposited on 9-6-1969 out of Rs. 15,0001- given by the assessee and other amounts received by the minor by way of dividends; and Rs. 3,0001- had been deposited on 27-10-1969 utilising the sum of Rs. 1,000.00 given by the assessee along with certain other sum such as interest on deposit, dividends, sale proceeds of shares etc. standing in the name of the minor. The ICC issued cheques for Rs. 3,681.91 during the financial year 1969-70 in favour of the minor which were credited to his accounts with the Dena Bank and the Bank of Tokyo out of this, a sum of Rs. 3,542- has been taken as the interest attributable to the funds derived from the father and this is not in dispute.