BHAI SWINDER SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Delhi Bench 'A', has referred the following question to this Court under S. 66(1) of the Indian IT Act, 1922 :

(2.) THE assessee, late Bhai Sunder Dass, is an individual. We are concerned with the asst. yrs. 1958 -59 and 1959 -60, the relevant previous years being those ended on 12th April, 1958, and 12th April, 1959, respectively. According to the assessee, he carried on a sole proprietary business in the name and style of M/s Gianchand Sunderdass (Gian Chand being the name of his brother) at Jhelum (now in Pakistan) till 1948. The business consisted of supplying stones and other building materials to the Government under contracts. While he was at Jhelum, he had submitted a tender to the Central Government for supplying 20,000 boundary stones for the use of the Survey Department and the same was accepted by the Government on 24th May, 1947. A formal agreement was drawn up on 11th June, 1947, and the same was signed by Sunderdass for M/s Gian Chand Sunderdass. On 25th May, 1947, the assessee wrote to the Survey Department of India informing that he had 3,000 milestones ready for delivery at Tarki, but was not in a position to deliver the same at the stipulated site on account of non -availability of transport due to the disturbed political situation in the country. He requested, therefore, that the survey Department may make arrangement for transporting the stones from Tarki and for having them shaped into boundary stones at a total costs of Rs. 19,783. The Government did not respond to his request. As the transport was not made available, Sunderdass was not in a position to complete the contract till he migrated to India after the partition of the country. The stones were thus left at Tarki. After coming to India, Sunderdass offered to deliver the stones under the contract but without any success. The assessee then called upon the Pakistan Government to pay him compensation for the stones left behind. The assessee also made a similar claim for compensation to the Government of India. The Pakistan Government repudiated the assessee's claim on 26th March, 1957, which falls in the asst. yr. 1958 -59, and the Indian Government also repudiated his claim on 26th July, 1958, which falls in the asst. year 1959 -60. After coming to India, the assessee entered into a partnership with his son, Sardar Singh, in the name of M/s Bhai Sunderdass Sardar Singh, and started the business of constructing Government buildings under contracts. His share in the partnership was Rs. 0 -9 -6, while the share of Sardar Singh was Rs. 0 -6 -6. Separate accounts were being maintained for the new partnership business.

(3.) THE assessee preferred appeals to the AAC as regards the claim for deduction of the loss of Rs. 19,783. He took the view that, if at all it was a loss, it had taken place in the year 1947, that the contract business of supplying stones was stopped in 1948, and that the contention of the assessee that the said business of the firm, M/s Gianchand Sunderdass, and the present business of the firm, M/s Bhai Sunderdass Sardar Singh, were identical, was not acceptable. He, therefore, rejected the assessee's claim and confirmed the orders of the ITO.