COMMISSIONER OF INCOME TAX Vs. GUN NIDHI DALMIA

JUDGEMENT

(1.) THESE petitions under S. 256(2) of the INCOME TAX ACT, 1961, pray for a direction to the Tribunal, Delhi Bench -B (for short called " the Tribunal "), to state the case and refer questions Nos. 6 to 9 to this Court in addition to questions Nos. 1 to 5 already referred.

(2.) THE year of assessment is 1963 -64. The assessee received rental income from a property which he had agreed to purchase from Bharat Insurance Co. under the agreements of 1955 and 1959. The assessee had submitted the details of receipts and expenses from such rental income which disclosed an excess of Rs. 11,973 on the receipt side and this excess was worked out after deducting interest of Rs. 43,482. The ITO held that the interest of Rs. 43,482 was not allowable and that the rental income was also taxable and thus added the income of Rs. 55,455. On appeal, the AAC came to the conclusion that the assessee could have borrowed money to pay the unpaid price and on the analogy that the interest paid on such borrowed capital would be allowable as expenditure, allowed the sum of Rs. 43,482 as interest in respect of the unpaid purchase consideration. The addition of the rental income was confirmed. The Tribunal accepted the assessee's contention that the rents are not assessable in the assessee's hands. The appellate order states, " However, the AAC has allowed the assessee deduction in respect of the interest paid from the property income taxed by the officer. This would not any longer be available to the assessee and the net relief the assessee willget as a result of this finding of ours will be only Rs. 11,973 (vide para 60 of the assessment order r/w para 30 of the AAC's order)." The Tribunal declined to make reference of the following questions:

(3.) MR . Wazir Singh has invited our attention to CIT vs. Althi Bangarayya (1975) 100 ITR 10 (SC), as also to the provisions of S. 68 of the INCOME TAX ACT, 1961, and urges that a question of law does arise from the order of the Tribunal. The question whether an unexplained amount could be covered by intangible additions of the previous years was then not decided by the Supreme, Court when a view was taken that a question of law whether the Tribunal's order was valid arises out of the order of the Tribunal. Even in S. 68, the assessee could offer an explanation about the nature and source of the cash credits found in the books of account of the assessee. The ITO could charge the income only on coming to the conclusion about the explanation of the assessee. In this case, the explanation of the assessee was accepted by the Tribunal that the cash credit represents the assessee's income that could have come out of the income assessed in the past.