POKHRAJ HIRACHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ON a direction given by this Court under Sub -S. (2) of S. 66 of the Indian IT Act, the Tribunal has drawn up the statement of the case, raising the following two questions:

(2.) IN our view, it would not be necessary to answer the second question inasmuch as our answer to the first question would be sufficient for the disposal of the reference in favour of the assessee.

(3.) THE assessee filed a voluntary return of his income for the aforesaid asst. year 1948 -49. The income shown by him in the return amounted to Rs. 8,12,000. In the computation of the said amount as his income, the assessee had deducted Rs. 3 lakhs. Apart from the aforesaid receipts passed in his favour by Milkhiram, the assessee filed also an affidavit before the ITO, stating the facts regarding payment by him of Rs. 3 lakhs to Milkhiram, in support of his claim that he had paid Rs. 3 lakhs to Milkhiram and that it was a revenue expenditure. In the assessment order the ITO observed that he was not satisfied whether the expenditure of Rs. 3 lakhs has been incurred by the assessee at all. He further held that even if the assessee had paid any amount to Milkhiram, it was not an expenditure relating to the business of the assessee but was of a capital nature. The relevant portion of the order is in the following terms: