COMMISSIONER OF INCOME TAX Vs. MEHMOODMIAN A TOPIWALA

JUDGEMENT

(1.) THE following two questions of law have been referred to this Court for opinion by the Tribunal, Ahmedabad Bench 'B' under S. 256 of the IT Act, 1961 (the Act) :

(2.) FACTS The assessee, i.e., Mehmoodmian A. Topiwala is being assessed in the status of an individual. This reference relates to the asst. year 1974 -75. Three brothers, i.e., (1) Shri Abdullahmian A. Topiwala, (2) Shri Mohammed Husein A. Topiwala, and (3) Shri Mehmoodmian A. Topiwala were joint owners of a land admeasuring 7,629 sq. yds. situated at Paldi, in, Ahmedabad. The assessee gifted his one -third share in the land situated at Paldi, Ahmedabad, to two sons of Shri Abdullahmian A. Topiwala on 25th March, 1976. On the same day, the assessee's brother, i.e., Shri Abdullahmian A. Topiwala transferred his one -third share belonging to him in the said land to the assessee's wife Hafsabanu. The assessee's wife sold the land received by her as a gift from the assessee's elder brother. The sale of the land resulted in capital gains of Rs. 23,830 for the asst. yr. 1968 -69 and Rs. 44,300 for the asst. year 1969 -70. The amounts received by the wife of the assessee were invested by her with the assessee. The assessee had paid interest of Rs. 2,860 and Rs. 7,195 to his wife. While working out the income of the assessee for the asst. year 1974 -75, the ITO added the aforesaid two amounts in the income of the assessee in view of the provisions of s. 64 of the Act.

(3.) FEELING aggrieved, the assessee preferred an appeal before the AAC. The AAC noted that the ITO had not given any reason for applying the provisions of S. 64 while adding Rs. 2,860 to the income of the assessee. The AAC referred to the past record and presumed that this interest might have been paid on Rs. 15,000 which Hafsabanu had received by cheque from the assessee's brother. He further found that the amount was not transferred by the assessee to his wife but was gifted by the assessee's brother and, hence, S. 64 had no application. In that view of the matter, the AAC deleted the addition of Rs. 2,860.