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1 - 10 of 20 (0.31 seconds)The Limitation Act, 1963
Section 94 in The Indian Trusts Act, 1882 [Entire Act]
Section 18 in The Limitation Act, 1963 [Entire Act]
Ram Janki Devi & Anr vs M/S. Juggilal Kamlapat on 28 January, 1971
15. We may also notice at this stage the difference between a deposit and a loan. In the case of loan, money passes from the payer to the payee at the instance and for the requirement or use of the latter, while in the case of a deposit the payee receives the money at the instance of the payer and the requirement or use of the payee is not a relevant fact for consideration. Surrounding circumstances, relationship of the parties and the character of the transaction, are all factors decisive of whether a transaction is a deposit or money or loan--Ram Janki Devi v. Juggilal Kamalapat AIR 1971 SC 2551. In case of doubt, the presumption is that a transaction is a deposit and not a loan. A depositee stands in a fiduciary relation to the depositor.
Kanhayalal Supdubhai vs Hiralal Deoram on 29 March, 1946
It has been held in Kanyalal Supdubhai v. Hiralal Deoram AIR 1947 Bom. 255 that where money is deposited in confidence, the transaction is a deposit made in trust and the depositee stands in a fiduciary relation to the depositor and is liable to render an account to the depositor. In this case, the history, and the genesis of the amount showed that this money was entrusted to the care of Bhai Mohan Singh to be held in deposit for the benefit of legal heirs, with a view to evade the attachment of the same from income-tax. About the origin, there is no dispute. This origin clearly indicates that the money came to the assessee by way of a deposit and not by way of a loan. The essential requisite of a loan is that the money must come to the assessee at his request and for his use, which was not the case here. Therefore, there is enough evidence to show that this is only a deposit and not a loan and for deposit; under Section 22, the time of limitation runs from the date when the payment was demanded and in this case it was a continuing debt. The question of the debt becoming extinguished or becoming unenforceable by the operation of Section 22 does not arise. In our opinion, the Commissioner (Appeals) also is in error in holding that there is no constructive trust insofar as this money is concerned. Section 94 of the Indian Trusts Act, quoted by him, clearly applies to the facts of this case and the assessee does hold this money in the trust for the legal representatives of Bhai Sunder Das and there is no escape from that situation. The reason that there was no legal obligation, cannot be accepted because the origin of this deposit and the subsequent conduct clothe this transaction with a legal obligation to hold the money in the trust. Looked at from any angle, it does appear that the assessee did owe this money to Bhai Sunder Das & Sons and that the liability did not extinguish and is enforceable at law and, therefore, a live debt. Assuming for the sake of argument that the debt became unenforceable, then only the remedy to file a suit is barred and the debt never ceased to subsist. This is a well settled law and we do not have to dwell on this subject. Thus, we arrive at a position where the creditor, Bhai Sunder Das & Sons, claims the debt and continue to do so ; the debtor, i.e., the assessee admits the liability and acts on that basis. There, how can the debt be said to have extinguished. The debtor in no case alters the legal position, by terminating unilaterally the liability. Since this is the main reason, if not the only reason (others being supporting reasons), that weighed with the revenue to hold that the debt extinguished and the liability to make over the interest to Bhai Sunder Das & Sons ceased and since it has been found that the debt existed, we hold that the approach of the revenue is not correct. We, therefore, find it extremely difficult to agree with the conclusions of the department.
Article 288 in Constitution of India [Constitution]
Section 80 in The Indian Trusts Act, 1882 [Entire Act]
Section 95 in The Indian Trusts Act, 1882 [Entire Act]
H.E.H. Nizam'S Religious Endowment ... vs Commissioner Of Income-Tax, Andhra ... on 26 October, 1965
6. The ITO was not prepared to accept this contention. He held that Bhai Sunder Das died in 1963 and the assessee did not accept the liability to anybody. There was, thus, no debt owed by the assessee on the last day of the previous year relevant to the year under assessment to anyone. The ITO further pointed out that the question of calling one for evidence would arise only when confirmatory letters were filed by those persons. Since no confirmatory letters were filed in this case, the question of calling them would not arise. Relying upon the Supreme Court decision in the case of H.E.H. Nizam's Religious Endowment Trust v. CIT [1966] 59 ITR 582, the ITO observed that the onus to establish exemption was on the assessee, who claims exemption of any class of income and that onus was not discharged in this case. He also dealt with the merits of the assessee's claim. The assessee's claim was that the sum of Rs. 17,89,183 was a debt owed by him to Bhai Sunder Das as on 31-3-1973, and that money was held by him under the trust. To this, the objection of the ITO was that, there was nothing by way of documentary evidence to establish that the money was held by the assessee under the trust. No legal obligation existed binding the assessee to pay this money to the estate of Bhai Sunder Das. If at all there was any legal obligation, as contended for by the assessee, it could only be an obligation created by the assessee himself and a self-imposed obligation could not operate as superior overriding title, diverting the income at source. The assessee contended before the ITO that it was not fair and proper on the part of the department to call for details of this sum and other evidence when, in all the previous assessment years, the said amount was not included in the assessment. There were no fresh facts or materials or evidence coming into the possession of the department to take a different view. But the ITO took the view, that even if it was conceded that the amount was owing by the assessee to the estate of Bhai Sunder Das, the debt became barred by limitation. Various authorities, cited by the assessee to the contrary, did not find favour with the ITO. It may be noticed here that the assessee's submission that even though the liability to pay the said sum to the estate of Bhai Sunder Das existed on the death of Bhai Sunder Das in 1963, there arose quarrels among the members of that family ; with the result the assessee was not certain as to who are the legal representatives who should receive the money and who could give a valid discharge for the debt on behalf of all. The assessee requested them to let him know to whom the money should be paid. Since no reply was coming to the assessee, he withheld the repayment of the debt to them, but held the same on trust for them. The assessee never denied the liability to pay to them, but only wanted the person to whom the money should be paid. There is a reason for the assessee to entertain doubts as to the legal heirs of Bhai Sunder Das. At one time, it was claimed that there was a partial partition in respect of this particular book debt on 31-3-1956, amongst the members of the family. At another point of time, Smt. Somawanti, the widow of Bhai Sunder Das, claimed that she was entitled to one-seventh of the estate of Bhai Sunder Das according to a will. Thus, a doubt arose as to whether the heirs of late Bhai Sunder Das were claiming the money on the basis of the alleged partial partition in the family or on the basis of the alleged will or on grounds of survivorship. The assessee further submitted that he was also not aware, whether any probate of the alleged will was taken from the Court. This incapacity and disability to make the repayment, in spite of his best intentions, was construed by the ITO as amounting to denial of liability. To prove the point that the legal heirs of Bhai Sunder Das were demanding payment and the assessee was complying, he referred to the orders served on him by the TRO demanding the assessee to clear the income-tax demand owing by Bhai Sunder Das out of the aforesaid sum, which the assessee promptly complied with. The TRO could not have suo motu demanded from the assessee the payment of tax dues of Bhai Sunder Das, unless so requested for by the legal heirs and the assessee would not have complied with unless he accepted the liability as subsisting. But the ITO stuck to his line of argument that the debt became barred by limitation and there was no legal liability and the creditors of the assessee were not even in a position to enforce their rights, by filing a suit for the recovery of the aforesaid debt. A liability, according to the ITO, which was not legally enforceable, could, not be allowed as a deduction. What influenced the ITO to suppose that the debts became barred by limitation was the fact, that though the books of account showed that there was a debt owing by the assessee to Bhai Sunder Das, there were no payments made after 1957 except for the payment of income-tax. The ITO believed that if the assessee was honest enough to repay the money, nothing prevented him from depositing the money in a Court and requesting the Court to distribute it among the legal heirs of Bhai Sunder Das. Since the assessee did not adopt this course, it showed that the assessee was not owing the money to the estate of Bhai Sunder Das. In an attempt to prove that the assessee had the intention of repaying the debt, it was pointed out to the ITO that the assessee had kept equivalent money separately in a bank account, and had not used it for business purposes. According to the ITO, this fact did not establish that the assessee had the intention of making the payment to the creditors. He attributed the allowance in the past assessments to a mistaken appreciation of the facts and since the principle of res judicata did not apply to income-tax proceedings, he justified the course of departure. In this manner, the entire sum of Rs. 1,20,670 was added back to the income of the assessee.