G VEERAPPA PILLAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this application, the assessee requires the Appellate Tribunal to refer to the High Court a certain question of law, which is said to arise out of the Tribunal's order dated 18th June, 1951, in I. T. A. No. 1139 of 1939-40. Inasmuch as a question of law does arise out of the aforesaid order, we hereby draw up a statement of the case, agreed to by both parties, and refer it to High Court of Judicature at Madras under section 66(1) of the Indian Income Tax Act, 1961.

(2.) THE assessee is the proprietor of a fleet of buses being run under the name and style of 'Sri Sathi Vilas Bus Service', Porayar. In respect of 1946-47 assessment year, for the previous year ended 31st December, 1945, the assessee claimed a deduction of Rs. 12, 429 being litigation expenses incurred in a suit filed by him in O. S. No. 37 of 1944, in the Court of Subordinate Judge, Kumbakonam, against Messrs. Raman & Raman Co. Ltd. Kumbakonam, and its Managing Director Mr. P. S. Narayana Iyer, for possession and delivery of 5 buses viz., M. D. O. 6, M. D. O. 7, M. D. O. 81, M. D. O. 230 and M. D. O. 759, on the ground that he is lawfully entitled to the same as owner. THE provocation for filing the said suit was as follows : THE aforesaid buses were being plied by one T. D. Balasubramaniam Pillai in the name and style of 'Chamundeswari Bus Service' between Kumbakonam in Tanjore District and Karaikal in French Territory. T. D. Balasubramaniam's name is given as the owner and holder in the registration certificates and route permits issued by the Road Traffic Board, Tanjore, in respect of the aforesaid five buses and also in those issued by the Revenue Department, French settlements in India, Karaikal, except in the case of two, which stood in the name of one Muthuramalingam Pillai, who admitted that he has no proprietory interest in them. Assessee claims to have purchased the aforesaid buses for a sum of Rs. 35, 001 on 10th April, 1944 from Gnanasambandam Pillai, wife's brother of Balasubramaniam, and who is alleged to be the real owner. THEse buses were said to have been acquired and run benami in the names of Balasubramanyam and Muthuramalingam as Gnanasambandam Pillai had been black-listed for his smuggling activities and were being looked after by his brother-in-law Balasubramaniyam in the absence of Gnanasambandam Pillai because of jail.

(3.) WHILE on the one hand the aforesaid events were taking place, the assessee by a petition dated 12th March, 1944, applied to the Secretary, Road Traffic Board, Tanjore, for permission to run two of his own buses in the Kumbakonam - Karaikal route as only 3 out of the 7 buses of Chamundeswari & Santhanayagi Bus Services authorised to run on that route, were actually plying. He was granted temporary permits by the Secretary, Road Traffic Board, vide order dated 16th March, 1944. On further applications made by the assessee temporary permits to put in 3 mere buses on this route were also granted as the said 'Chamundeswari Bus Service' by this time had stopped functioning and was suspended. These permits were extended from time to time.