COMMISSIONER OF INCOME TAX Vs. ALIMCHAND TOPANDAS

JUDGEMENT

(1.) IN this reference at the instance of the Revenue under S. 256 (1) of the IT Act, 1961, three questions are posed to us. They read thus :

(2.) COUNSEL are agreed that the first question must be answered in the negative and in favour of the Revenue in view of the decision of the Supreme Court in Lohia Machines Ltd. vs. Union of India (1985) 44 CTR (SC) 328 : (1985) 152 ITR 308 (SC), and that in the circumstances the second question does not arise. The first and second questions are, therefore, answered accordingly without elaboration.

(3.) THE overall impression that we gather upon a reading of paragraph 14 of the Tribunal's order is that the assessee had borrowed moneys and had employed the same in its new industrial undertaking. There is no finding of fact by the Tribunal to that effect. In fact, the Tribunal has in paragraph 13 stated that there was, according to the assessee, no borrowing or debt on account of the new industrial undertaking and the Revenue had not been able to point out any specific borrowing or debt raised for setting it up. We are, therefore, unable to understand the reference in paragraph 14 to the fact that "two funds are available with the assessee". The Tribunal says in paragraph 14, "The normal presumption would be that the assessee would utilise a particular fund out of more than one fund at his disposal for a particular purpose which would be most advantageous to him." We are unable to see the need for a presumption. The question is one of fact, as to which were the funds at the assessee's disposal and which were employed by him in the particular case. The Tribunal says in the same paragraph that "it would have been most advantageous to the assessee to have used its own fund for the new undertaking instead of using its borrowed capital" and "there is no apparent reason or material to hold that it did not do so." We are unable to find in the Tribunal's order an affirmative finding of fact that the assessee did use its own fund for the new undertaking instead of its borrowed capital. The Tribunal says that "it was for the assessee to have made a mental note of its decision to utilise a particular fund for a particular purpose". We are unable to detect in the Tribunal's order a finding of fact of any such mental note having been made by the assessee or of a "decision" by the assessee in this regard.