CET Vs. CHARAT RAM AND SONS

JUDGEMENT

(1.) THESE two expenditure -tax references (Expenditure -tax References Nos. 13 and 14 of 1964) will be disposed of by one order because they raise identical questions relating to two sister concerns, and indeed practically one set of arguments has been addressed in this Court. Expenditure -tax Reference No. 13 of 1964 relates to M/s Charat Ram & Sons and the facts necessary for understanding the controversy would be clear from the following relevant portion of the agreed statement of the case forwarded to this Court by the Tribunal (Delhi Bench "C") :

(2.) IN the assessment of the assessee -family's taxable expenditure for the asst. year 1958 -59, the assessee sought to exclude sums aggregating to Rs. 2,997, being the expense incurred for personal purposes of the members such as club expenses, travelling expenses, expenses on outfit, price paid for a watch, etc. The assessee -family contended before the Expenditure -tax Officer that the amount of Rs. 2,997 represented the personal expenses of the members of the assessee -family incurred by them but it had been wrongly debited to the HUF's account. The Expenditure -tax Officer, however, observed that there was nothing to indicate that although those expenses were debited to the assessee - family's account, the same were to be treated as personal expenses of the individual members of the family, particularly when regard is had to the fact that most of those expenses were such as could have been normally met by the assessee -family, e.g., watch for one of the daughters purchased by the Karta, Charat Ram, tailoring bills of clothes, etc. The Expenditure -tax Officer further observed that the fact that a considerable amount of expenses which were formerly debited to the HUF's account, was later on transferred to the personal account of the Karta, Shri Charat Ram, by credit to the assessee -family's account during the previous year clearly demonstrated that wherever necessary adjustments regarding such expenses had been made in the accounts. Accordingly, the Expenditure -tax Officer assessed the said amount of Rs. 2,997 as part of the assessee -family's taxable expenditure for the asst. year 1958 -59. Copy of the Expenditure - tax Officer's order is annexed hereunto as annexure" A" and forms part of the case.

(3.) THE Tribunal's order accepting the assessee's contention on the above points is annexed hereunto as annexure 'C' and forms part of the case.