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TMI Blog1982 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... han. The assessment was completed by the ITO as per order dated31-3-1979, determining total income at Rs. 1,30,320. 3. In the assessee's cross-objection as many as three grounds, including the Ground No. 3, which is general in nature, have been raised. Learned departmental representative has pointed out, with reference to para 7 of the Appellate Commissioner's order, that none of the grounds mentioned in the Ground No. 2 of the cross-objection was pressed before the Appellate Commissioner. That being the position, we hold the cross-objection to that extent to be incompetent. Nor are we satisfied that the assessee had not been duly heard by the Appellate Commissioner. 4. ENTERTAINMENT EXPENSES --- The assessee had claimed deduction in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of payment of interest. The ITO made an add back of Rs. 36,000 out of the said expenditure on the reasoning that various amounts of interest totalling to that figure had been, in fact, paid by the assessee-firm to its various partners, even though payments had been shown in the assessee-firm's books as have been made not to the partners as such directly, but to as many as five AOPs. Actually, the assessee-firm had paid, by way of interest, Rs. 9,000 to each of the five AOPs. Details of add back appears as under: 1. Raj Kishan Investors Union Rs. --- Usha Devi 3,600 --- Raj Kishan 5,400 2. Hari Kishan Investors Union --- Usha Devi 1,800 --- Madhu Bala 1,800 3. Narendra Pd. Investors Union --- Kanti Prasad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Co. [1979] 117 ITR 111 (All.) and CIT v. Brij Mohan Dass Laxman Das [1979] 117 ITR 121 (All.) were applicable to the facts of the present case. The cases of CIT v. Hind Construction Ltd. [1972] 83 ITR 211 (SC) and CIT v. Dewas Cine Corporation [1968] 68 ITR 240 (SC) were also cited on the revenue's side. Hind Construction Ltd.'s case was cited for the proposition that any contribution of capital made by a partner to a partnership firm, in the form of an asset, did not bring about a sale as such, even if the cost was entered into the books of the firm at a figure higher than the market value of that asset. Dewas Cine Corporation's case was cited for the proposition that no balancing charge arose for taxation under section 41(2) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to us as to why a single memo of agreement was made when five different associations were being constituted. Further, as per the recital all the five associations are stated to have been formed "for the purposes of earning profits and carrying on business in trading in various commodities by actual purchase and sale, or by settlement and also to work as investors and to earn profits as an association, being separate and independent of each other". There is no material on record to indicate as to whether any of the said five associations carried on any activity over and above advancing loan to the instant assessee-firm. 10. With a view to appreciate the legal controversy it is necessary to mention that in the present case none of the four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed to have been exercised and the second officer would be bound by the action of the first officer. The said conclusions of their Lordships also clearly suggest, firstly, that there is only a single passage of money and that the department having once exercised its option cannot go back on it in the matter of taxing an AOP as such or its individual constituents. In the present case that option stands exercised by the department in the form of individual constituents of the AOPs being substantively assessed. An AOP is not a legal person in the eye of law. For all these reasons, we reverse the learned Commissioner's finding and restore the finding of the ITO regarding the add back in question. 11. The revenue's appeal is allowed. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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