It is also the admitted case of the parties that the assessee earned a dividend income of Rs.
95,664/ , the Tribunal held that as the said income had been credited to the account of the assessee in terms of cl.
1,05,000/ which he had paid to the Bharat Bank for number taking delivery of the shares were also deductible because this was a business expenditure.
The Income tax Officer also included the sum of Rs.
The High Court agreed with the Tribunal that in the facts and circumstances of the case there was numbertransfer of equitable title of the shares to the assessee and, therefore, he was number entitled to claim deduction of Rs.
Whether on the facts and in the circumstances of the case the tribunal rightly held that the dividend amount of Rs 95,664/ did number companystitute the income of the assessee Out of these questions, Question No.
Appeal by Special Leave from the Judgment and Order dated 22 1 1971 of the Delhi High Court in 1.
It was further alleged by the assessee that even the damages amounting to Rs.
1,05,000/in respect of 7500 preference shares of the Dalmia Investment Company Ltd. ?
44,14,990/ and, therefore, a sum of Rs.,
In fact four years back i.e. in 1944 45 the joint family of which the assesses was a member had sold these very shares along with other shares to the Bharat Bank Ltd. The agreement by which the assessee purchased these shares is dated February 5, 1948 and is to be found at Annexure A on p. 19 of the Paper Book.
1,05,000/ as damages for his failure to take delivery as stipulated in the agreement between the parties.
2,04,744/ ?
The assessee has companye up to this Court,, after obtaining special leave from this Court.
The assessee filed an appeal before the Appellate Assistant Commissioner who affirmed the order of the Income tax Officer, though on slightly different grounds with which we are number companycerned here.
2,04,744/ was deductible under s. 12 2 of the Income tax Act, 1922 hereinafter referred to as the Act.
Thus the only questions that were to be determined by the High Court were Questions Nos.
3 of the agreement dated February 5, 1948 it bad number been actually earned by the assessee and the receipt of the dividend by the Bank was only taken into account for finalisation of the price.
Whether on the facts and in the circumstances of the case the tribunal rightly held that the revenue was number estopped from disallowing the claim for the deduction of the interest amount in view of the allowance of such claim in the past ?
95,664/ being the dividend income was number to be included in the total income of the assessee.
It was further agreed that if the shares were number taken delivery of by this date, the dividends, rights, bonuses etc.
Finally, the assessee also claimed that the sum of Rs.
The assessment year in the instant case is 1953 54 i.e. the previous year ending September 30, 1952.
1,05,000/ which the assessee paid as damages to the Bank, the Tribunal held that as the assessee was number doing business exclusively in shares he was number entitled to set off the interest paid by him as revenue loss.
In spite of the fact that the assessee had agreed to buy the shares from the Bharat Bank Ltd. he did number take delivery of the transfer forms and the share certificates by making payment of the purchase price.
Thereafter the appellant moved the Tribunal for making a reference to the High Court and after hearing companynsel for the parties the Tribunal referred the following questions for the opinion of the High Court Whether on the facts and in the circumstances of case the tribunal rightly rejected the assessees claim for deduction of, the interest payment of Rs.
Thereafter the assessee filed an appeal before the Tribunal which gave a finding that under the facts and circumstances of the present case there was numbertransfer of equitable title in the shares to the assessee and, therefore, he was number entitled to any deduction of the interest paid by him on the capital amount which companystituted the purchase money of the shares.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The finding of the Tribunal on Question No.
Bishamber Lal for the Appellant.
As regards the third point, namely, the sum of Rs.
The assessee claimed that be was entitled to deduct the interest paid for acquiring the shares worth Rs.
1 , 3 and 4 .
25 of 1966.
The Judgment of the Court was delivered by FAZAL ALI, J. In this appeal by special leave, the assessee who is an individual had purchased a large number of shares from the Bharat Bank Ltd. for Rs.
95,664/ .
Whether on the facts and in the circumstances of the case the tribunal rightly disallowed the loss of Rs.
on the purchase price from April 1, 1948 till actual delivery of the shares Clause 4 of the agreement provided that if for any reason the shares were number taken delivery of by March 31, 1951, the Bank will be at liberty to sell the then undelivered shares and to hold the assessee liable for the difference in the price fetched by the shares.
P. Raman, Addl.
95,664/ in the total income of the assessee.
2,04,744/ on the said amount.
T. Reference No.
and J. Ramamurthi for the Respondent.
which may be declared after that date, namely, March 31, 1948 will be held by the Bank for the benefit of the assessee and the assessee would be liable to pay interest at the rate of 6 p.a.
1519 of 1971.
The Income tax Officer rejected all the pleas taken by the assessee and disallowed the deductions claimed by the assessee as mentioned above.
44,14,990/ by borrowing this amount from the, Bharat Bank and he paid interest of Rs.
Under the agree ment dated February 5, 1948 it was agreed that the shares would be taken delivery of on or before March 31, 1948.
As regards the assessees claim to the dividend income of Rs.
