Madras High Court
Commissioner Of Income-Tax vs Pandian Distributors on 6 August, 2002
Equivalent citations: [2003]259ITR428(MAD)
Author: V.S. Sirpurkar
Bench: V.S. Sirpurkar
JUDGMENT N.V. Balasubramanian, J.
1. In pursuance of the directions of this court in T. C. P. No. 122 of 1991, dated September 7, 1992, the Income-tax Appellate Tribunal has stated a case and referred the following question of law in relation to the assessment year 1982-83 of the assessee :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the provisions of Section 68 are not attracted in respect of the alleged capital contribution of Rs. 60,000 and in deleting the relevant addition while the account copy in the books of the firm shows the amount of Rs. 60,000 as cash received contrary to the explanation offered during the course of assessment proceedings ?"
2. The brief facts necessary for the disposal of this tax case reference are as follows : the assessee is a firm of two partners, viz., one P. Thiagarajan and another K. L. Sri Hari. The firm was constituted by a partnership deed dated July 30, 1981, and its business was deemed to have commenced from July 16, 1981. The firm was a registered firm. Even before the commencement of the firm, on May 16, 1981, one of the partners of the firm, viz., P. Thiagarajan, had paid a sum of Rs. 30,000 as licence fee for warehouse and depots under the State Excise Rules to the State Government and had deposited another sum of Rs. 30,000 as a wholesale security deposit with the State Government. The question arose whether the sum of Rs. 60,000 credited to the account of Thiagarajan and treated as his capital contribution should be treated as undisclosed income of the firm. The Tribunal found that even before the commencement of the business of the firm on July 16, 1981, Thiagarajan had paid Rs. 60,000 as security deposit and licence fees with the Government which was given credit in his capital account. The Tribunal further held that it was not a case of cash credit at all and the provisions of Section 68 are not attracted. The Tribunal, therefore, held that the amount of Rs. 60,000 cannot be referred to as the undisclosed income of the firm as Thiagarajan had given a statement that the said amount was given by him even before the commencement of the business of the firm for the purpose of carrying on the business.
3. We find that the Appellate Tribunal has arrived at the conclusion that the sum of Rs. 60,000 was not the undisclosed income of the firm on the basis of the materials available on record and on the basis of the statement of Thiagarajan, which was believed and accepted by the Tribunal, we are, therefore, of the view that the finding recorded by the Tribunal on the basis of the material is a pure finding of fact and does not call for any interference by this court. We do not find any question of law that arises out of the order of the Tribunal. Accordingly, we answer the question of law referred to us in favour of the assessee and against the Revenue. No costs.