COMMISSIONER OF INCOME TAX Vs. GURDIAL SIGH

JUDGEMENT

(1.) THESE nine references made at the instance of the Revenue seek opinion of the High Court on the following common questions of law arising in the same background of facts:-

(2.) THE assessees Shri Gurdayal Singh and Shri Tara Singh were directors of Green Finance (I) (P) Ltd. In the relevant years, namely, the asst. yrs. 1971-72, 1972-73 and 1975-76 in the case of Gudayal Singh and in the asst. yrs. 1969-70 to 1972-73 and 1976-77 in the case of Tara Singh. The personal accounts of the said two directors in the said company showed debit balances on which no interest was charged by the said company from the aforesaid two directors. The ITO held that the directors having derived benefit from the said company to the extent of 10 per cent interest on the said debit balances were assessable on the said income under S. 2 (24) (iv) of the IT Act, 1961. This finding was upheld by the AAC.

(3.) THE learned counsel for the Revenue has relied on a Division Bench decision of the Madras High Court in Addl. CIT vs. A.K. Lakshmi 1978 CTR (Mad) 171 : (1978) 113 ITR 368. The facts of the case bear a close resemblance to the fact of the case at hand. During the course of its judgment the Division Bench has observed:-