COMMISSIONER OF INCOME TAX Vs. CHELLIAH V S

JUDGEMENT

(1.) THESE references have been made on the application of the Revenue by the Income-tax Appellate Tribunal, Madras Bench "C", in R.A. Nos. 1315 to 1317 of 1972-73, under s. 256(1) arising out of I.T.A. Nos. 2629 to 2631 of 1972-73, in respect of the assessment years 1967-68, 1968-69 and 1969-70, respectively, on the following common question of law :

(2.) THE assessee is an individual during the relevant accounting period. THE assessee had made a gift of Rs. 1,02,000 in favour of his wife, Mr. V. S. C.Saraswathi Ammal, prior to the commencement of the accounting period relevant to the assessment year 1967-68. THE amount was kept in deposit with the assessee. THE assessee had paid Rs. 14,158 for 1967-68, Rs. 13,090 for 1968-69 and Rs. 15,699 for 1969-70 towards interest. Out of the above interest amounts, Rs. 2,628 for 1967-68, Rs. 2,329 for 1968-69 and Rs. 4,169 for 1969-70 formed interest on interest on Rs. 11,530 for 1967-68, Rs. 10,761 for 1968-69 and Rs. 11,530 for 1969-70 respectively. THE ITO included the interest amounts on the gifted amounts of Rs. 1,02,000 excluding the interest on the interest in computing the total income of the assessee under s. 64(1)(iv) of the I.T. Act and levied income-tax.

(3.) IT is not disputed that the assessee had transferred by way gift, Rs. 1,02,000 during the accounting year, which had earned interest for the relevant assessment year of 1967-68 and that, therefore, the interest income, excluding the interest on interest, was collectively included in computing the total income of the assessee. The inclusion of the wife's income under s. 64(1)(iv) has not been disputed.