TMI Blog1988 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... amount Rs. 17,872 as Revenue expendiure." 2. The common facts pertaining to both the aforesaid grounds are stated as follows: The respondent-HUF came into existence during the year under consideration and the ITO accepted the said status in his assessment order dt., 5th Dec., 1983. The Karta of the HUF, late Dr. Nigam R. Parekh, was a surgeon by profession and connected with the Family Planning Project of the Directorate of Health Services, Government of Gujarat. In this capacity he used to perform family planning operations at various camps organised by the Directorate. To enable him to perform such operations he took the help of an instrument known as "Leproscopic". Under the terms of the circular issued by the Gujarat Govt., the surge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect that the instrument charges were assessable in the hands of the HUF. He accordingly converted the protective assessment into a substantive assessment in the hands of the HUF. He also allowed the claim for expenditure to the extent of Rs. 14,453. 6. Being aggrieved with the order of the AAC, the Department came up in appeal before the Tribunal. In the course of the hearing it was contended that the AAC had accepted the assessee's claim without giving an opportunity to the ITO to peruse the additional evidence placed before the AAC for the first time. This initial objection raised on behalf of the Revenue was considered favourably by the Tribunal and vide its order dt. 4th March, 1986 in ITA No. 606/Ahd/85 the matter was restored back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. I find that the machine can be held as belonging to the HUF for the reason that the HUF not only used its own funds for the purpose of purchasing the machine but incurred debts which were paid back by the HUF in the same accounting year. Secondly the bills of purchase of the machine from various parties are in the name of HUF as different from the individual capacity of the doctor. One cannot therefore say that there was any after thought or tax planning with a view to avoid tax. The certificates from the medical authorities show that the charges were paid for the use of the machine. The appellant has produced before me circular (copy of which was shown to the ITO) which shows that it is a regular and normal feature in family planning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment were attributable to the personal skill and ability of Dr. Parekh the same were includible in his individual assessment rather than the assessment of the HUF. He also referred to the decision of the Supreme Court in the case of McDowell Co. Ltd vs. CTO (1985) 47 CTR (SC) 126 : (1985) 154 ITR 148 (SC) for the proposition that the creation of the HUF was a device to bifurcate the income of Dr. Parekh. He also referred to the circular dt. 19th July, 1979 issued by the Directorated of Health, Govt, of Gujarat vis-a-vis the terms of the family planning camp and the bifurcation of the charges between the surgeon and the individual or institution providing the Leproscopic instrument. He finally made an impassioned plea for the confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since there is uncontroverted evidence available on record to show that the instrument has been purchased out of the funds of the HUF including loans. There is no bar on an HUF to borrow funds and purchase assets or make investments for earning income. The assessee's case is on a more stronger footing since it has repaid the loans during the year under consideration itself and that also out of the funds of the HUF. Even the bills for the purchase of the machine are in the name of the HUF. It would be appropriate to record that the observations of the AAC in para 6 of his order stand uncontroverted on behalf of the Revenue. We are also of the view that the argument pertaining to the "tax planning device" has come forth a little late in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l expenditure. It was also pointed that the AAC had allowed a major portion of the expenditure but without applying his mind to each of the individual items. In this connection specified reference was made to the expenditure on account of salary, petrol and motor expenses (vis-a-vis) the personal expenditure of Dr. Parekh as also the other items of expenditure mentioned in the order of the AAC. We in fact asked the assessee's counsel to furnish the relevant details to us to enable us to adjudicate upon the matter. He, however, expressed his inability to do so but fairly agreed that the matter could be remitted back with a view to give an opportunity to the ITO to examine the nature of the expenditure on the lines indicated in our order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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