1954 (10) TMI 11 - SUPREME COURT

Whether there is any evidence before the Tribunal to support the conclusion that the main purpose of the transactions was the avoidance of excess profits tax ?

Whether on the facts admitted or proved the share of income of Dr. Surmukh Singh in the firm of Ram Singh & Co., can be legally included along with the share of income of Ram Singh and Gurdayal Singh ?

Whether on the facts and circumstances of the case the leasing of machinery, etc., by the assessee firm to the company was a business within the meaning of Section 2(5) of the Excess Profits Tax Act ?

Held that:- The High Court should have, after answering question No. 3 in the negative, reframed the referred question No. 1 by restoring question No. 1 as suggested by the assessee firm in its petition and should have answered the question so restored in the negative and in favour of the assessee.

For the reasons stated above, we allow this appeal, reframe question No. 1 by restoring the first question suggested by the assessee firm, namely :--

" Whether under the facts and circumstances of the case the application of Section 10A with a view to amalgamating the income of the firms Uppal & Co., and Ram Singh & Co., with the income of the appellant firm was correct and valid in law ? "

And we answer the question so reframed in the negative. Question No. 2 must be answered in the negative and in favour of the assessee by way of necessary corollary. We also answer question No. 3 in the negative. Appeal allowed.