TMI Blog1941 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1922. The respondent's claim was rejected by the Income-tax Officer, the Assistant Commissioner of Income-tax, and the Commissioner of Income-tax, the last of whom at the request of the respondent, made a reference under Section 66(2) of the Act to the High Court of Judicature at Patna, which decided the reference in favour of the respondent by a judgment dated the 17th October, 1939, against which the present appeal has been taken by the appellant. The relevant provisions of Section 10 of the Act are as follows:- 10.-(1) The tax shall be payable by an assessee under the head 'Business' in respect of any profits or gains of any business carried on by him. (2) Such profits or gains shall be computed after making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of the Act. 8. The only connection of the late Maharajadhiraja with the Agra United Mills Co. Ltd., was that he was a shareholder, and that he had advanced a loan of ₹ 10,00,000 to the Mill. For the latter the late Maharajadhiraja had brought a suit and obtained a decree in 1927. The expenses incurred in this latter suit have been allowed as expense incurred in the assessee's money-lending business. The Agra suit had no connection with any business of the assessee. He was involved in the suit because he happened to be a very rich man and was therefore liable to attack by unscrupulous persons to relieve him of part of his surplus cash. 9. Opinion of the Commissioner.-On the above findings of fact, it is respectfully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the text for decision of the reference. Agarwala, J., states:- The contention that the suit against the late Maharaja was instituted against him not because he was a money-lender but because he was a wealthy nobleman is not, in my opinion, acceptable. It was because the late Maharaja lent money to the company that an opportunity was afforded to the plaintiffs to allege that the advance of 10 lakhs of rupees actually made was only a part performance of a contract the scope of which was very much wider. It was the relationship of money-lender and borrower which provided a foundation on which the allegations against the late Maharaja were based and the main purpose of the suit was to obtain damage for the breach of an alleged money- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of money-lending. I am satisfied that the suit was primarily against the Maharaja in his capacity as money-lender, and not merely as a rich nobleman, and it was based primarily too upon breach of contract by the money-lender. In the opinion of their Lordships, the only right view as to the nature of the Agra suit is that expressed by these learned Judges. It appears that the conclusion arrived at by the appellant was mainly based upon his view that there was no connection between the late Maharaja's loan of Rs. ten lakhs to the Mills and the transaction alleged by the plaintiffs in the Agra suits. This view is expressed in paragraph 8 of the appellant's statement of case, and is repeated in his further statement of case in comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action was just as essential for the full protection of his rights as the creditor in the loan of ₹ 10 lakes, as was his suit for the recovery of the loan. It has to be remembered that money is the stock in trade of a money-lender. The appellant might well have come to a different conclusion, if he had realised the close connection of this loan with the transaction alleged in the Agra suit. If it really added anything, their Lordships would agree with the High Court that at least three of the other transactions referred to in the appellant's further statement of case provide evidence that the alleged transaction with the Agra United Mills was not foreign to the money-lending business of the respondent and his father. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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