TMI Blog1998 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be: Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation.-For the purposes of this section, the amount repaid shall include the amount of interest paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled, to the proper consideration of those transactions as loans borrowed and repaid. Learned counsel for the Revenue in support of the order of the Income tax Officer submitted that the document in reality is a hundi and relied on the following illustration of a hundi given in the commentary on the Negotiable Instruments Act by Bashyam and Adiga, 16th edition, page 47: Thavamani Hundi for loans-(2) Madras Place and date .............. At ................. days after the date we jointly and severally promise to pay or order at the Imperial Bank, Madras, a sum of Rs. ..................... only for value received in cash. Signature It was, therefore, submitted that the documents executed by the assessee in this case which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court in Harsuk Das v. Dhirendra Nath AIR 1941 Cal. 498 (FB) and the decisions of this court in CIT v. S. Ramanathan (1995) 215 ITR 79 and CIT v. Paranjothi Salt Co. (1995) 211 ITR 141 as also the decision, of a Bench of this court in Tax Case No. 888 of 1983 decided on 20-1-1994 (CIT v. Grahalakshmi and Co. (1999) 240 ITR 952 (Appex). Reference was also made to the decision of the Andhra Pradesh High Court in CIT v. Dexan Pharmaceuticals Pvt. Ltd. and Instrument TechniqueS Pvt. Ltd. (1995) 214 ITR 576. In all these decisions it has been held that the normal characteristics of a hundi are as stated in the submission of the counsel, i.e., an unconditional order made by the maker directing the third person to pay certain sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Act being arises. Further the effect of section 1 of the Act is to make the Act applicable to all negotiable instruments if such instruments are in any language other than an oriental language. The instruments in oriental language to the extent provided in section 1 are unaffected by the provisions of the Act. The instruments in question here as already noticed contain a definite promise to pay ; which promise is unconditional ; it is signed by the maker ; and the sum of money to be paid is certain ; the identity of the payee is set out, and the provision is made for payment to him or to his order. The time of payment, however, is not merely on, demand, but at the expiry of the period specified in the instrument. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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