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Issues:
1. Assessment of interest income for the assessment year 1964-65. 2. Addition of income from lorry hire in computing the assessee's income for the same assessment year. Assessment of Interest Income: The case involved the assessment of interest income of the assessee-firm for the assessment year 1964-65 under section 256(2) of the Income-tax Act, 1961. The Income-tax Officer added Rs. 21,970 as interest income received from amounts advanced to growers and Rs. 17,395 as income from lorry hire to the total income of the assessee. The Appellate Assistant Commissioner upheld the addition of interest income but found that the two disputed lorries did not belong to the assessee. The Tribunal dismissed the cross-objection of the assessee and allowed the appeal of the Department, confirming the additions made by the Income-tax Officer. However, the High Court found that there was no material to support the findings of the Tribunal regarding the interest income. The court observed that the basis used by the Income-tax Officer to estimate the interest recovered from growers was arbitrary and not sustainable. The Appellate Assistant Commissioner and the Tribunal did not provide independent consideration on this matter, leading the High Court to rule in favor of the assessee on the first issue. Addition of Income from Lorry Hire: Regarding the addition of Rs. 17,395 towards income from lorry hire, the Income-tax Officer estimated the collection of lorry hire from growers based on incomplete information provided by the assessee. The Appellate Assistant Commissioner upheld this addition, stating that even though the lorries were mainly used for the assessee's purposes, it could not be conclusively proven that they were not used for hire to others. The Tribunal also supported this addition without detailed analysis. However, the High Court found insufficient evidence to justify the addition of income from lorry hire. The court highlighted the lack of material on record to support the addition and ruled in favor of the assessee on the second issue as well. In conclusion, the High Court ruled in favor of the assessee on both issues, finding that there was no substantial evidence to support the additions made by the Income-tax Officer and upheld by the lower authorities. The court directed that each party bear their own costs in the matter.
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