Skip to content


Commissioner of Income-tax (Central) Vs. Birla Bros. (Private) Ltd. - Court Judgment

LegalCrystal Citation
Overruled ByCommissioner of Income Tax (Central), Calcutta Vs. Birla Bros. P. Ltd.
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference Nos. 7 and 176 of 1961
Judge
Reported in[1969]72ITR44(Cal)
ActsIncome Tax Act, 1922 - Section 10(2)
AppellantCommissioner of Income-tax (Central)
RespondentBirla Bros. (Private) Ltd.
Advocates:Balai Pal, Adv.
Cases ReferredGouri Prasad Bagaria v. Commissioner of Income
Excerpt:
- sen, j. 1. these two references are taken up together for consideration. in income-tax reference no. 7 of 1961 the following question was posed for consideration by this court under section 66(1) of the indian income-tax act, 1922 (hereinafter called the 'act'): ' whether, on the facts and in the circumstances of the case, the sumof rs. 5,60,199 was an admissible deduction in computing the businessprofits of the assessee ' 2. it appears that the commissioner of income-tax suggested certain questions for being sent up to this court for consideration in his application under section 66(1) of the act before the tribunal. the tribunal, however, only sent up the above question to this court. the matter was, therefore, taken up by the commissioner of income-tax under section 66(2) of the act to.....
Judgment:
Sen, J.

1. These two references are taken up together for consideration. In Income-tax Reference No. 7 of 1961 the following question was posed for consideration by this court under Section 66(1) of the Indian Income-tax Act, 1922 (hereinafter called the 'Act'):

' Whether, on the facts and in the circumstances of the case, the sumof Rs. 5,60,199 was an admissible deduction in computing the businessprofits of the assessee '

2. It appears that the Commissioner of Income-tax suggested certain questions for being sent up to this court for consideration in his application under Section 66(1) of the Act before the Tribunal. The Tribunal, however, only sent up the above question to this court. The matter was, therefore, taken up by the Commissioner of Income-tax under Section 66(2) of the Act to this court. This court asked for a further statement of the case on the following questions framed by it. They are as follows :

'1. Whether there was any evidence in support of the Tribunal's finding that the assessee-company had stood guarantee for the loan given to Messrs. U. P. Sales Corporation Limited by the Gwalior Industrial Bank Limited

2. If the answer to question No. 1 be in the affirmative, then whether there was any evidence to show that the assessee-company stood such guarantee in the ordinary course of its business

3. If the answer either to question No. 1 or to question No. 2 be in the negative, then whether the sum of Rs. 5,60,199 was allowable as a deduction in computing the profits of the assessee '

3. Birla Brothers (Private) Limited, hereinafter called ' the assessee ', carried on, inter alia, banking and financing business and acted as themanaging agents of various companies, one of which was Messrs. Starch Products Limited. Messrs. U. P. Sales Corporation Limited, a company incorporated on February 4, 1943, were the selling agents of Messrs. Starch Products Limited. The assessee, in the course of its business, stood guarantee for a loan of Rs. 6,00,000 borrowed by Messrs. U. P. Sales Corporation Limited from Gwalior Industrial Bank Limited which was also one of the concerns of the assessee. During the assessment for the year 1953-54 the assessee-company claimed deduction in respect of Rs. 5,60,199 as a bad debt in the account of Messrs. U. P. Sales Corporation. The facts are that Messrs. U. P. Sales Corporation Limited had borrowed Rs. 6,00,000 from the said bank and the assessee-company stood guarantee for the loan. The loan incurred by Messrs U. P. Sales Corporation Limited could not, however, be repaid. On August 2, 1948, the Gwalior Industrial Bank Limited went into liquidation and the assessee, three days thereafter, paid the amount of the loan to this bank on August 5, 1948, by a cheque drawn on the United Commercial Bank Limited. According to the assessee, the aforesaid amount was paid to the said bank as a guarantor on behalf of Messrs. U. P. Sales Corporation Limited. As the latter also went into liquidation on March 23, 1952, and as there was no chance of realising the amount, the assessee-company wrote off the debt at the end of the accounting year which commenced on 31st October, 1951, and ended on 18th October, 1952, the assessment year being 1953-54.

4. At the time of the assessment, the Income-tax Officer asked the assessee-company to produce evidence in support of its version and in compliance therewith the assessee produced a copy of a letter dated 10th December, 1946, by which the U. P. Sales Corporation Limited requested the assessee to give a guarantee of a loan which it had proposed to take from the Gwalior Industrial Bank Limited. A copy of another letter dated 21st December, 1946, addressed to the said bank, whereby the assessee undertook to indemnify the loss against any loan advanced by the bank was also submitted to the Income-tax Officer. Furthermore, the account figures of Gwalior Bank and other materials were also produced before the Income-tax Officer. The Income-tax Officer, however, disallowed the assessee's claim on the following grounds :

1. There is no director's resolution authorising the furnishing of the alleged guarantee;

2. The document purporting to give the guarantee has not been executed on stamp paper;

3. The original papers have not been produced; and

4. The auditors have not mentioned the guarantee or contingent liability in the balance-sheet.

5. He also held that, even if the assessee: had given the guarantee to the Gwalior Industrial Bank Limited in discharge of the loan on behalf of Messrs. U. P. Sales Corporation Limited, such a guarantee was not given by the assessee in the usual course of business.

6. On appeal to the Appellate Assistant Commissioner, he found that the assessee actually stood guarantee for the loan on behalf of the U. P. Sales Corporation Limited and advanced the loan as a matter of commercial expediency but concurred with the conclusion of the Income-tax Officer on the ground that the assessee did not advance the loan in the course of its money-lending business. The details regarding the findings of the Appellate Assistant Commissioner will be dealt with later.

7. Against this order an appeal waa taken to ihe Appellate Tribunal. It found that it was in the larger interest of the assessee's business that the assessee, as a guarantor, made the payment. According to it, if such a guarantee was not given, Messrs. Starch Products Limited, one of the managed companies, would have had to give extended credit to the selling agents and this could be possible if the managed company, in its turn, was financed either by the managing agents or a third party. To obviate the necessity of such borrowing by the managed company, the assessee-company stood guarantee for the loan given by the Gwalior Industrial Bank Limited to U. P. Sales Corporation Limited. It also did not concur with the finding of the Appellate Assistant Commissioner that the bad debt would be allowable only if the assessee had advanced the money upon interest. The Tribunal found that all that the assessee did was to stand surety for the money advanced by the bank to the selling agents of one of the managed companies. It was also of the view that in the larger interest of the assessee's business the guarantee was given. The standing of surety for the sales organisation of the managed companies and the consequent loss arising therefrom was, in its opinion, germane to the assessee's business and it was so done on the ground of commercial expediency and in order to indirectly facilitate the carrying on of the business which should be treated as an allowable deduction in computing the profits and gains of the business.

8. This court, at the time of passing the order on the petition under Section 66(2) of the Act, directed that in their statement of the case the Tribunal should make it clear as to what evidence was placed before them on the issue mentioned in the order and upon what they relied in arriving at their conclusion. It appears from the statement of the case under Section 66(2) that the Tribunal did not specifically comply with the order of this court but instead has generally referred to the materials which were placed before the Income-tax Officer and the Appellate Assistant Commissioner with the result that, in answering the question, we have to look into the details of the evidence as appearing in the paper-book.

9. Let us take up questions Nos. 1 and 2 as appearing in the reference under Section 66(2) of the Act. Mr. Balai Pal, appearing for the revenue, has contended in the first instance that the payment of the money to the Gwalior Industrial Bank Limited was not done in the course of business and that the factum of standing as guarantor by the assessee for the U. P. Sales Corporation Limited was done in such a circuitous manner that no relief should be given to the assessee under Section 10(2)(xi) of the Act. He entirely supports the finding of the Income-tax Officer who disallowed the claim of the assessee on the ground that the advance was not made in the course of the company's money-lending business as no interest was charged for and that the manner in which the transaction was entered into, smacks of an oblique purpose for avoidance of income-tax.

10. According to him, the Tribunal had come to its own conclusion infavour of the assessee merely on surmise. The Tribunal's conclusion, thatit was in the larger, interest of the assessee's business that the guaranteewas given, was based purely on hypothesis land the circuitous process ofstanding guarantee to a company which was not its managed companycannot give rise to the assessee's contention that the case falls under Section 10(2)(xi) of the Act.

11. The Income-tax Officer found as a fact that, though technically the U. P. Sales Corporation Limited was not managed by the assessee, the entire finance of this company was provided by it. It has also been found by him that the Gwalior Industrial Bank Limited was also the concern of the Birlas (assessee). s In spite of this fact, it came to the conclusion that, even assuming that really a guarantee was given, it was not done for an allied concern and, as the U. P. Sales Corporation Limited does not come under this category, the guarantee, even if proved; could not be held to be in the course of the business. These were some of the reasons which weighed with the Income-tax Officer for refusing the claim of the assessee.

12. The Appellate Assistant Commissioner, however, in appeal, was of the view that the guarantee was, as a matter of fact, given, but, in the case under consideration, it could not be said that the guaranteeing of a loan to U. P. Sales Corporation Limited, though made in the interest of the assessee's business and as a matter of business expediency, represented an advance in the normal course of business, of the assessee. He also found that the U. P. Sales Corporation Limited was undoubtedly the selling agent of the assessee's managed company, Messrs. Starch Products Limited. But on account of this fact no conclusion can be arrived at that the guaranteeing of the loan was made as a matter of commercial expediency. According to him, no deduction under Section 10(2)(xi) could be made on the legal principles decided in the case of Commissioner of Income-tax v. S. R. Subramanya Pillai, [1950] 18 I.T.R. 85.

13. The Tribunal, however, reversed the finding of the Appellate Assistant Commissioner for the reasons stated before.

14. There is a finding by the Appellate Assistant Commissioner to theeffect that the question as to the advance of money to the bank arose onaccount of the assessee's standing as a guarantor for a loan from the bank.From the statement of the case in the reference under Section 66(2) of theAct, it appears clear that when the Appellate Assistant Commissioner's orderwas taken to the Tribunal in second appeal by the assessee, there was nocontroversy about the Appellate Assistant Commissioner's finding whichwas in favour of the assessee that a guarantee was really given asalleged.

15. It was also stated that the finding of the Appellate Assistant Commissioner that the assessee had advanced the loan as a guarantor and as a measure of business expediency was never controverted before the Tribunal; although it was open to the department to do so under Rule 27 of the Tribunal's Rules.

16. This court at the time of passing the order under Section 66(2) made an observation to the effect that, on the materials placed before it, it was very difficult to come to the conclusion that the Appellate Tribunal had any evidence before it to come to the conclusion that there was a guarantee or that the guarantee arose in the ordinary course of the business of the respondent. Therefore, in this reference, we are mainly concerned with the question whether it fulfils the conditions as stated in Section 10(2)(xi) of the Act and whether there was evidence before the Tribunal for its conclusion that it was in the larger interest of the assessee's business that the assessee, as a guarantor, made the payment. It also observed as stated before that if such a gurantee had not been given, Messrs. Starch Products Limited, one of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party. It was further of the opinion that, in order to obviate the necessity of such borrowing by the managed company, the assessee-company stood guarantee for the loan given by Gwalior Industrial Bank Limited to U.P. Sales Corporation Limited.

17. Before dealing with the question whether there is any evidence tojustify the finding of the Tribunal, it would be profitable to quote here therelevant portions of Section 10(2)(xi) of the Act. Section 10(1) providesthat the tax shall be payable by an assessee under the head ' Profits andgains of business, profession or vocation ' in respect of the profits or gainsof any business, profession or vocation carried on by him; Sub-section (2)provides that :

' Such profits or gains shall be computed after making the following allowances, namely :--.........

(xi) When the assessee's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money-lending business, such sum in respect of loans made in the ordinary course of such business as the Income-tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee : Provided that if the amount ultimately recovered on any such debt or loan is greater than the difference between the whole debt or loan and the amount so allowed, the excess shall be deemed to be a profit of the year in which it is recovered, and if less, the deficiency shall be deemed to be a business expense of that year.'

18. The most important element of the aforesaid Clause (xi) is that the debts or loans must be in respect of a business which is carried on by an assessee in the relevant accounting year and that such debts or loans must be in respect of and incidential to the business, profession or vocation and the loans must be made in the ordinary course of a banking or money-lending business. Further it must be irrecoverable. Therefore, in this case we are mainly concerned to see whether the money paid by the assessee as a guarantor was done in the course of business and whether it was irrecoverable.

19. We have already stated the materials which were placed before the Income-tax Officer and the Appellate Assistant Commissioner. The most important finding of the Appellate Assistant Commissioner is that the guarantee was, in fact, given. This fact was not challenged by the Commissioner of Income-tax before the Tribunal. On analysis of the Tribunal's order, it appears that if such guarantee was not given, Messrs. Starch Products Limited, one of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party, This finding is borne out from the letters which were exchanged between the U. P. Sales Corporation Limited dated 10th December, 1946, as also from the letter of the assessee dated 21st December, 1946, wherein it was clearly stated by the assessee that necessary undertaking was given to the Gwalior. Industrial Bank Limited and a commitment to indemnify the bank was made against any loss or inconvenience due to the non-payment of a loan by the company up to a maximum of Rs. 6,00,000. There is also the letter of the assessee addressed to the Income-tax Officer dated 15th February, 1958, to the effect that, asthis loan was one of the many loans advanced by the company, it was not necessary to mention these facts in the board's meeting as per the usual practice of the company. Further, it was stated in this letter that the money was advanced in the usual course of business. As the company failed to repay the bank, the assessee had to pay the money in question on their behalf. It further appears that the U. P. Sales Corporation had considerable amount of loans which could not have been unknown to the assessee because of its very intimate connection with the debtor. The balance-sheets as on July 19, 1947, and July 7, 1948, were produced before the Income-tax Officer and there is sufficient indication in the order of the Income-tax Officer at page 14 of the paper-book in Income-tax Reference No. 7 of 1961 that the Gwalior Industrial Bank was under the common management of the assessee, Messrs. Birla Brothers. An additional fact was also made clear before the Appellate Assistant Commissioner to the effect that, in the course of business in the year 1939, the assessee stood as a guarantor with the Imperial Bank of India for the advance of loan to Daga Hosiery Company Limited--presumably a managed company of the assessee. These were the salient facts which appear to have been taken into consideration by the Tribunal in coming to the conclusion that the assessee had stood guarantee for the loan given to Messrs. U. P. Sales Corporation Limited by the Gwalior Industrial Bank Limited.

20. Mr. Balai Pal, in the first instance, has referred us to the decision in Commissioner of Income-tax v. S. R. Subramanya Pillai, relying upon which the Appellate Assistant Commissioner negatived the contention put forward by the assessee. In that case, the assessee, who was a bookseller, borrowed from time to time jointly with another person a sum of Rs. 16,200 out of which the assessee took a sum of Rs. 10,450 for his business needs and the other person took the balance. The joint borrowing was necessitated by the business needs of both the borrowers and by the insistence of moneylenders who required the joint security of the two persons. The other man failed in his business and the assessee had to repay the creditor the whole of the joint borrowing. The assessee had also to spend a sum of Rs. 658 in an unsuccessful attempt to recover the amount due from the other debtor. The assessee claimed before the Income-tax Officer to deduct the sum of Rs. 658 and also the sum of Rs. 5,049 which he had to pay to the creditors on account of other debtor's share of the joint loan in the computation of business profits.

21. On these materials, the Madras High Court held that the assessee was not entitled to deduct the said amount in computation of the business profits either under Section 10(2)(xi) or Section 10(2)(xv) of the Act as business loans. Obviously, the said amounts were not taken into accountfor computation of the business profits on the ground that the joint loan was not taken for the assessee's business, profession or vocation, nor was it incidental to it.

22. Furthermore, it appears that such a loan was not taken jointly in the ordinary course of business. The facts on which this decision was made have no semblance with those of the instant case. Accordingly the decision cannot be invoked in aid of the applicant's case.

23. Mr. Balai Pal has at the next place urged before us that the payment by the assessee to the Gwalior Industrial Bank Limited, three days after it had gone into liquidation smacks of an oblique purpose and cannot, therefore, be taken into consideration in computing the business profits of the assessee. The materials placed before us do not show that the irresistible inference is that the payment was made with an oblique purpose. Because a bank has gone into liquidation, it did not mean that the assessee was absolved from his liability on the guarantee. Really what the court is concerned to see is, as to whether the Tribunal had some evidence before it to come to the conclusion that the guarantee was given and money paid in the course of the assessee's business. The Tribunal has come to a finding of fact that there was no dispute that the sum of Rs. 5,60,199 was actually paid by the assessee-company to the Gwalior Industrial Bank Limited. About this we have already pointed out that there was no challenge on behalf of the department regarding this matter and the Tribunal came to its conclusion on a consideration of the evidence as placed before it. It does not further appear to us that, in so far as the guarantee matter is concerned, the Tribunal's conclusion suffers from any infirmity or that it ignored any relevant evidence which would go counter to the conclusion that the assessee did not stand as a guarantor or pay the money in due course of business. It appeared, however, that the Tribunal had considered the evidence covering all essential matters in the matter of guarantee before coming to its conclusion. Even assuming that it did not do so, if the conclusion is based upon some evidence ignoring other essential matters, it cannot be regarded as a finding which is not based upon any evidence.

24. On an overall consideration of all the materials placed before us, we are of the view that the assessee-company stood guarantee for the loan given to Messrs. U.P. Sales Corporation Limited by the Gwalior Industrial Bank Limited and the question No. 1 in the reference under Section 66(2) (Income-tax Matter No. 176 of 1961) must be answered in the affirmative.

25. The second question in this reference is of some importance. The Tribunal considered the fact that it was in evidence that this was not a case where any money was given by the assessee for the purpose of earning interest. If such guarantee was not given, Messrs. Starch Products Limitedone of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party. It was in the larger interest of the assessee's business that the guarantee was given. On this finding, a question has arisen whether the advancing of the money to the Gwalior Industrial Bank Limited on account of guarantee, was done in the usual course of business of the assessee. We would like to repeat here that there was evidence before the Income-tax Officer that, though technically the U. P. Sales Corporation Limited was not managed by the Birlas, the entire finance of the company was provided by Birla Brothers Limited. Further, it appears that on the 31st March, 1947, the debtors, viz., U.P. Sales Corporation Limited, had considerable amount of loans and there was an accumulation of loans of several lakhs of rupees. Further, it appears that the U. P. Sales Corporation Limited was the selling agent of Indian Starch Products Limited, the managed company of the assessee. From these facts, it appears that both the U. P. Sales Corporation Limited and the Starch Products Limited were the proteges of the assessee. Now on these facts the Tribunal had come to its conclusion that it was now well established that a sum of money expended, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the ground of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be an allowable deduction in computing the profits and gains of the business. The Tribunal has undoubtedly relied upon the observation of Viscount Cave in the case of Atherton v. British Insulated and Helsby Cables Ltd., [1925] 10 Tax Cas. 155 At page 191 Viscount Cave observed as follows :

' It was made clear in the above cited cases of Usher's Wiltshire Brewery v. Bruce, [1915] 6 Tax Cas. 399 and Smith v. Incorporated Council of Law Reporting, [1914] 6 Tax Cas. 477 that a sum of money expanded, not of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the business, may yet be expended wholly and exclusively for the purposes of the trade...'

26. It seems to us that the findings as to the relationship of the assessee with the U. P. Sales Corporation is not borne out by the facts. It has already been pointed out that the U. P. Sales Corporation Limited was directly financed by the assessee. In any event, the Tribunal has in its finding shown the connection of the Indian Starch Products Limited and the U. P. Sales Corporation Limited in such a manner which would warrant the conclusion that the assessee was not only indirectly but directlyconcerned with the U. P. Sales Corporation Limited. The nexus, as stated by the Tribunal, is as follows :

' All that the assessee did was to stand surety for the money advanced by a bank to the selling agent of one of its managed companies. If such a guarantee was not given Messrs. Starch Products Limited, one of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party. It was to obviate the necessity of such borrowing by the managed company that the assessee-company stood guarantee for the loan...'

27. This finding of fact would go to show as to how the assessee was interested in both the concerns and we agree that it was in the larger interest of the assessee's business that the guarantee was given and we are of opinion that the debt was incidental to the business of the assessee within the meaning of Section 10(2)(xi) of the Act and such a debt was found to be irrecoverable in the relevant accounting year commencing on the 31st October, 1951, and ending on the 18th October, 1952. We do not, accordingly, consider that the argument of Mr. Balai Pal to the effect that the advance was made with an oblique purpose and not in the course of business, can be accepted.

28. Mr. Balai Pal has referred us to the Supreme Court decision of Commissioner of Income-tax v. Malayalam Plantations Limited : [1964]53ITR140(SC) . Their Lordships in this case discussed the scope of the words ' for the purpose of the business ' appearing in Section 10(2)(xi) of the Act. As no decision as to the scope of Section 10(2)(xi) has been made in that case, we do not think that it has any bearing to the instant case, inasmuch as the assessee's case is that it comes under Section 10(2)(xi), the scope of which has been discussed before.

29. The next case to which reference has been made by Mr. Pal is in Commissioner of Income-tax v. Abdullabhai Abdulkadar : [1961]41ITR545(SC) . On a perusal of this judgment it appears that the facts are entirely dissimilar. It has been observed by their Lordships, inter alia, that under Clause (xi) of Section 10(2) of the Income-tax Act, a debt was only allowable when it was a debt and arises out of and as an incident to the trade. If it was not of that character it would be a capital loss. We have already shown in detail that the advancing of the loan by the assessee was incidental to the business, which comes within the ambit of Clause (xi) of Section 10(2) of the Act. As such, it cannot be said that we are proceeding upon a principle which was contrary to this decision.

30. From the order of the Tribunal it appears that the conclusion which was arrived at was based on evidence on record. The learned standing counselhas urged before us on behalf of the assessee that the Tribunal came to its conclusion upon some evidence placed before it, and that the factum of guarantee remained unchallenged and that it also took into consideration that the U. P. Sales Corporation Limited was a concern of the assessee being the selling agents of Messrs. Starch Products Limited. Accordingly, he has urged before us that it cannot be said that the court of fact, viz., the Tribunal, based its conclusions on conjectures and surmises in order that it might be interfered with by this court. According to him, if the Tribunal has come to a finding of fact covering all essential points, the quality or sufficiency of such evidence is not a matter for interference by this court. In support of his contention he has relied upon the Supreme Court decision in Gouri Prasad Bagaria v. Commissioner of Income-tax : [1961]42ITR112(SC) . Their Lordships of the Supreme Court held that when the assessee's statement was believed, there was obviously material on which the finding of the Tribunal was based and to seek for other material was tantamount to saying that a statement made by an assessee was not material on which a finding can be given. The Tribunal having believed the assessee's statement, there was an end of the matter in so far as that fact was concerned and if the finding was based upon a statement which was good material on which it could be based, no question of law really arose. This decision was followed by this court in a case, Commissioner of Income-tax v. J. Thomas and Company Limited, [1965] 55 I.T.R. 312.

31. In view of the above Supreme Court decision and the submission made by the learned standing counsel, we are of opinion that the material which was placed throughout before the taxing authorities and the Appellate Tribunal were taken into consideration by the latter and if, upon consideration of the same, it came to the conclusion that the assessee company stood guarantee in the ordinary course of the business, there is an end of the matter and there is no scope for interference by this court. It appears to us that, regard being had to the facts and circumstances of the case stated above and the law relating thereto, the Tribunal did not come to its conclusion on no evidence or on conjectures or surmises with the result that it cannot be said that the finding of the Tribunal was perverse.

32. In view of our decision made above, the questions in Income-tax Matter No. 176 of 1961 are answered as follows :

Question No. 1 ... YesQuestion No. 2 ... YesQuestion No. 3 ... Does not arise. The sum of Rs. 5,60,199 wasallowable as a deduction in computing the profitsof the assessee in view of the answers given toquestions Nos. 1 and 2.

33. In view of the answers given above in Income-tax Reference No. 176 of 1961, the answer to the question in Income-tax Reference No. 7 of 1961 is also in the affirmative.

34. The applicant will pay costs to the respondents in both the cases. Certified for two counsel.

Sinha, J.

35. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //