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TMI Blog1972 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... d. when the assessee's case was that in respect of that source of income it followed the cash system of accounting and not the mercantile system which it followed in respect of its business income? 3. Whether, in the circumstances of the case, the Tribunal was right in including in the assessable income of the assessee a sum of Rs. 2,181, as the assessee's share of income in another firm of the name and style of Gopal & Co.? " The facts giving rise to question No. 1 are these. While examining the account books of the assessee relating to assessment year 1940-41, the Income-tax Officer found that out of its borrowed capital, the assessee-firm had advanced a sum of about Rs. 9 lakhs to its partners but did not charge any interest on such advances. Out of the total interest claimed by the assessee as a deduction, the Income-tax Officer disallowed a sum of Rs. 30,000, representing the interest on the advances made to the partners on the ground that the capital advanced to the partners had not been utilised for business purpose. The assessee's appeal, on this point was re]ected by the Appellate Assistant Commissioner of Income-tax. The assessee then appealed to the Income-tax Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner held that the assessee was entitled to claim loss on the basis of the difference between the market price on the date of purchase and the sale price. The market price was determined at Rs. 715, per share. The Income-tax Appellate Tribunal on appeal by the assessee gave a finding that the market price was at Rs. 524-6-0. The Bombay High Court held that the Tribunal has no jurisdiction to give such a finding. In Pathikonda Balasubba Softy v. Commissioner of Income-tax the Mysore High Court has held that the powers of the Tribunal are limited to the subject-matter of appeal and that the Tribunal had no jurisdiction to make an enhancement beyond the figure fixed by the Income-tax Officer. Dr. Misra, the learned counsel for the department, contends that the powers of the Income-tax Appellate Tribunal are subject to no limitations and, as such, should be treated to include the power of enhancement. He has relied on three cases. The first case is, that of Hukumchand Mills Ltd. v. Commissioner of Income-tax It is difficult to appreciate how that case supports the contention of the learned counsel. There the Supreme Court, after stating that the powers of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirectly to place the assessee in a worse position by disallowing a sum of Rs. 36,000 in place of Rs. 30,000. Now, coming to the next question, the facts are that the assessee had leased out one of its factory premises to one Messrs. J. N. Cocolas and Company Ltd. for an annual lease rent of Rs. 15,000. The assessee claimed that it was not able to realise the least rent in the years under consideration and that it should, therefore, be assessed on that income only when it actually realised the same. In other words, the assessee's contention was that in respect of that source of income it followed the cash system of accounting and, as such, could be taxed only when such income was received. Now, the Income-tax Appellate Tribunal has taken the, view that the assessee had advanced certain loans to this party and, in respect of those loans, it was following the mercantile system, inasmuch as it used to debit to the party the amount of interest every year without its being realised. The Tribunal thought that, in such circumstances, the assessee Was not justified in not offering for assessment the rent which had accrued in its favour even though it had not been realised. In our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and Company. Its name was not in the partnership deed. The finding that Dilsukh Rai and Sitaram were benamidars of the assessee was recorded in the assessment proceedings of Gopal and Company of which the assessee was given no notice. The Appellate Assistant Commissioner of Income-tax held that although the assessee's name did not appear in the partnership deed, yet in the circumstances of the case it was clear that the assessee was the real owner of the shares allotted to Dilsukh Rai and Sitaram. It further held that, although no formal notice was given to the assessee, yet the assessee was fully aware of the case. Before the Tribunal no ground was raised with regard to the want of notice. All that was contended before the Tribunal was that in the circumstances of the case it could not be held that the assessee was liable to be taxed in respect of the share income of Dilaukh Rai and Sitaram. The finding recorded by the Tribunal is that Dilsukh Rai and Sitaram were benamidars of the assessee. This is a finding of fact and cannot be challenged in a reference under section 66(1) of the Act unless the finding is angled on the ground that it is based on no material. The sufficiency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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