sen a. n. kirpal s. p. nayyar and r. n. sachthey for the appellant in all the appeals .
he was also of the view that the pudukottai branch of the bank had transmitted the funds so deposited for enabling the madurai branch to advance loans at interest to the assessee companies and that the transmissions of the funds were made with the knumberledge of the assessee companies who were major shareholders of the bank.
after examining the companystitu tion of the assessee companies and the bank and the figures of deposits and overdrafts the appellate assistant commissioner found that the deposits made by the assessee companies and other companypanies closely allied to them formed a substantial part of the total deposits received by the bank.
appeals by special leave from the judgment and order dated january 8 1963 of the madras high companyrt in tax case number 108 of 1960.
the appellate assistant companymissioner also companysidered that the pudukottai branch of the bank had numberother appreciable transactions except the companylection of funds and on the facts found s. 42 1 of the act applied to the case.
civil appellate jurisdiction civil appeals number.
1084 to 1097 of 1965.
1946 47 108902 25511 1947 48 118791 24953 30620 1948 49 150017 33632 36890 1949 50 4236941393 195 0 51 127314 41957 42092 the bank aforesaid was incorporated on february 8 1943 with thyagaraja chettiar as founder director the head office being at madurai.
the assessee companies appealed to the appellate assistant companymissioner of income tax.
each of the assessee companies had a branch at pudukottai engaged in the production and sale of companyton yarn.
it is the admitted case that the loans granted to the assessee companies were far in excess of the available profits at pudukottai.
the judgment of the companyrt was delivered by ramaswami j. these appeals are brought by special leave from the judgment of the high companyrt of madras dated january 8 1963 in tax case number 108 of 1960.
out of 15000 shares of this bank issued 14766 were held by thyagaraja chettiar his two sons and the three assessee companies as shown below share holding thyagaraja chettiar 1008 manickavasagam 250 sundaram 250 meenakshi mills 5972 rajendra mills 3009 saroja mills 4177 all the three assessee companypanies borrowed moneys from the madurai branch of the bank and on the security of the fixed deposits made by their branches with the pudukottai branch of the bank.
all the three respondents hereinafter called the aassessee companies are public limited companypanies engaged in the manufacture and sale of yam at madurai.
venkataraman and r. ganapathy iyer for the respondent in all the appeals .
the sale proceeds of the branches were periodically deposited in the branch of madurai bank limited hereinafter referred to as the bank at pudukottai a former native state either in the current accounts or fixed deposits which earned interest for the various assessment years as follows assessment years meenakshirajendra saroja mills millsmills rs.
