judgement:
Civil Appeal No. 2085 of 1969.
From the Judgment and Decree dated 15 11 68 of the Madras High Court in Criminal Side Appeal No. 45/65.
M. Natesan and Mrs. section Gopalakrishnan for the Appellants.
V. section Desai, P. G. Gokhale and section R. Agarwala for the Respondents 1 2. 702 Ex parte for the Respondents 3.8.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by certificate is directed against an Appellate Judgment and Decree, dated November 15, 1968, of the High Court of Madras.
The facts leading to this appeal are as follows: The following pedigree table will be helpful in understanding the relationships of the parties: Palaniandi Pillai (died on 19 5 1928) | | | | | | | | Ramaswami Pillai Vadovelu Pillai Nataraja Pillai | (dies in 1953) (died in 31 1 57) | Dharmambal | (died in 1940) | | | | | R.Ekambaram R.Bala | subramaniam| (1st Defdt.) (2nd Defdt)| | | Rajamani Kamala Padma Sarada Laitha Selvaraj (3rd (4th (5th (6th (7th (died in 1952) Defdt.) Defdt.) Defdt.) Defdt.) Defdt.) =Rajammal (8th Defdt.) Palaniandi Pillai, shown in the above pedigree table, owned considerable properties.
On December 12, 1927, he executed a Will whereby he bequeathed certain properties to each of his three sons.
He appointed his sons, Ramaswami Pillai and Vadivelu Pillai, as Executors of his Will.
In regard to his third son, Nataraja Pillai, the testator in clause 5 of the Will stated: "My third son, Nataraja Pillai, shall take the income accruing from the properties, namely, my cast stand, house and ground, situate in the Western Row of Mint Street, bearing Municipal Door No. 278, Re survey No. 600, Collector 's Certificate No. 750 and the 5 Godowns, namely, 2 Godowns situate in Varadaraja Mudali St., bearing Municipal Door No. 90 and 91, and 3 Godowns situate in 3rd North Beach Road bearing Municipal Door Nos. 5, 6 and 7 to 9, Re survey No. 3158 and 3187, Collector 's Certificate No. 2550.
After his life time, if he leaves any male issue, they shall take the aforesaid properties, with 703 powers of alienations such as gift, usufructuary mortgage and sale.
If there are no male issue as aforesaid, my heirs shall take the aforesaid properties.
" Although the Will had not been probated, yet, by mutual arrangements between the first two sons who were named Executors in the Will, and the third son, Nataraja Pillai, the properties were distributed in consonance with the terms of the Will and the Executors conveyed and transferred the same to the respective legatees, and mutual release deeds were, also, executed by the three sons.
Ramaswamy Pillai died in 1954 and Vadivelu Pillai in 1953, Nataraja Pillai died on January 31, 1957, without leaving any issue.
His widow, Krishnammal, the appellant herein, filed the suit (C. section No. 7 of 1959) out of which this appeal has arisen.
She claimed (a) partition and separate possession of one third share in the (plaint schedule) properties left by her husband Palaniandi Pillai, alleging that the properties ' were in the possession of the joint family consisting of his sons, or in the alternative, (b) for a declaration of her title and for possession of the properties on the ground that her husband Nataraja Pillai got the same absolutely by way of partition under the deed, dated July 14, 1928, and she, as his heir, inherited the properties; in the alternative, (c) for a declaration of her rights to the properties on a true construction of the Will of her father in law, Palaniandi Pillai, and for possession of the properties.
The sons of Ramaswamy Pillai, respondents 1 and 2 herein, were impleaded as defendants 1 and 2, and the daughters of Vadivelu Pillai, respondents 3 to 7, were defendants 3 to 7.
The daughter in law of Vadivelu Pillai, respondent 8 herein, was added as 8th defendant.
The findings of the learned trial Judge, material for our purpose, were as follows: (i) Nataraja Pillai got only a life estate in the properties set out in Schedule I of the Plaint; (ii) the contingent interest in favour of the heirs of Palaniandi Pillai became vested only on the death of Nataraja Pillai, (iii) it is not open to the plaintiff, Krishnammal, to invoke Section 8 of the ; (iv) on the termination of the life interest given to Nataraja Pillai, the gift over in favour of the male issues could not take effect as he did not leave any male issue, with the consequence, that the properties, in effect, became revested in Palaniandi Pillai, but devolved on his heirs as if on intestacy; (v) Section 111 of the Indian succession Act would be applicable.
704 In the result, the appellants ' suit was decreed and it was held that she was entitled to one third share and separate possession of the same by partition of the Plaint Schedule 1 properties, and defendants 3 to 8 were equally entitled to one third share together with mesne profits relating to their shares in the said properties, while defendants 1 and 2 were entitled to the remaining one third share.
Aggrieved, defendants 1 and 2 preferred Letters Patent Appeal in the High Court, contending that, according to the terms of the Will of Palaniandi Pillai, they were his only heirs and entitled to get the entire properties in which Nataraja Pillai held only a life interest; and that neither the plaintiff nor defendants 3 to 8 were entitled to any share.
The Appellate Bench of the High Court purporting to proceed mainly on the scope and construction of Clause 5 of the Will of Palaniandi Pillai, held: (1) By his Will (exhibit P. 2) the testator had made "my heirs", i.e. the testator 's heirs as an "artificial" class of ultimate residuary legatees.
(2) This class of legatees or "my heirs" did not acquire a vested interest in the residuary bequest on the death of the testator.
(3) The ultimate bequest in their favour would become vested only in the event of Nataraja dying sonless.
(4) The mandate implicit in the words "if there are no male issues as aforesaid" occurring in Clause 5 of the Will (exhibit P. 2) is that such class of legatees or heirs of the testator would be ascertained and worked out at that point of time when Nataraja died sonless, and at no other.
(5) This class of "my heirs" of the testator would be ascertained with reference to the point of Nataraja 's death (without a son) on January 31, 1957, when succession opened out and the bequest became distributable, "on the hypothesis that Palaniandi Pillai had lived up to that time" i.e. January 31, 1957.
(6) Although this class of the heirs of the testator was to be ascertained on January 31, 1957 on the hypothesis that the testator and Nataraja died simultaneously, such ascertainment could not be done either by resorting to the Hindu Women 's Rights to Property Act, 1937 or to the , because Palaniandi Pillai actually died in 1928, long before the coming into force of these two enactments and he did not die intestate.
705 (7) Such class of heirs of the testator were to be determined according to the orthodox Hindu Law prevailing at the time of the testator 's death on May 19, 1928.
(8) Section 111 of the Indian Succession Act was not applicable.
On the above reasoning, the Appellate Bench of the High Court reversing the decree of the learned trial Judge, held that Respondents 1 and 2 herein were the only persons entitled to the entire Schedule 1 property on the death of Nataraja Pillai, to the exclusion of the latter 's widow, the plaintiff.
Thus the appeal was allowed and the plaintiff 's suit dismissed.
After obtaining a certificate under Article 133 of the Constitution from the High Court, the plaintiff, Krishnammal, has come in appeal before this Court.
Controversy in this case hinges around the scope and construction of Clause 5 of the Will (exhibit P 2).
In that connection, the first question that arises for consideration is: Did the testator by this Clause create or carve out an "artificial" class of his heirs ' and make a residuary bequest in their favour ? In our opinion, on a proper construction of the Will, the answer to this question must be in the negative.
It is well settled that legal terms such as "heirs", used in a Will must be construed in the legal sense, unless a contrary intention is clearly expressed by the testator.
The word "heirs", as pointed out by this Court in Angurbala Mullick vs Debabrata Mullick(1) cannot normally be limited to "issues" only.
It must mean all persons who are entitled to the property of another under the law of inheritance.
There is nothing in the language of Clause 5 of the Will which compels the construction that by use of the expression "my heirs" the testator meant something different from his 'heirs under the law. ' The expression "my heirs" has therefore to be construed as equivalent to "my legal heirs".
Thus considered, the words used in the last two sentences of Clause 5 of the Will are not words of gift over to any 'artificial ' class of heirs.
They only indicate that in the event of Nataraja 's death without any male issue, further devolution of the estate that had been given to him for life, would be regulated in favour of the testator 's heirs ascertained in accordance with Hindu Law of intestate succession.
That is to say, the testator did not specify or lay down any line of heirs, deviating from the Hindu Law of intestate succession.
706 The ground is now clear to consider the second question which is pivotal to the whole problem: Whether the heirs of the testator, on whom the estate was to devolve in the event of Nataraja dying sonless, were to be ascertained according to Hindu Law in force at the time of Nataraja 's death or according to Hindu Law, prevailing in 1928 when the testator died.
This question, also, is one of reaching at the real intent of the testator.
In order to expatiate, the true import of the last two sentences of Clause 5 of the Will (exhibit P 2), the same can be legitimately expanded, parenthesized and elucidated so as to read like this: "After Nataraja 's life time, if he leaves any male issue, they shall take the aforesaid properties, with powers of alienation.
If Nataraja dies without leaving any male issue, then my heirs, then ascertained according to law of inheritance, shall take the aforesaid properties." Thus amplified and elucidated, Clause 5 of the Will brings out, expressly or by inevitable implication, the intention and instructions of the testator in regard to the following: (a) In the event of the termination of the life estate of Nataraja on his death, without male issue, the property will devolve on "my heirs" i.e. the testator 's heirs.
(b) Such heirs of the testator are to be ascertained according to the Hindu Law of intestate succession.
(c) Such ascertainment of the heirs of the testator is to be done on the date of Nataraja 's death without male issue, when succession opens out in favour of those heirs, and not with reference to the date of the testator 's death.
This necessarily implies that "my heirs" of the testator are required to be ascertained on the hypothesis that the testator lived upto and died a moment after Nataraja 's death.
If what is spelled out at (a), (b) and (c) be the true construction of Clause 5 of the Will, it logically and inexorably follows therefrom, that ascertainment of the heirs of the testator, on whom the property was intended to devolve in the event of Nataraja dying sonless, was to be made in accordance with Hindu Law of intestate Succession as in force on the date of Nataraja 's death, on January 31, 1957, when succession opened out, and not in accordance with the orthodox Hindu Law prevailing in 1928, which on the relevant date, January 31, 1957, stood abrogated and superseded by the .
The conclusion is therefore inescapable that "my heirs" referred to by the testator in Clause 5 of his Will, have to be ascertained in accordance with the .
In so 707 doing, we are only giving effect to the import and construction of the Will of the testator, and no question of giving retrospective operation to the statute is involved.
The learned Judges of the High Court have said that at the time of making the Will, the testator could not predicate that at the time of Nataraja 's death without leaving any son, the Hindu Law of Succession would be different from the one prevailing at the time of making the Will or the testator 's death.
Nevertheless, the testator was definitely contemplating the contingency of Nataraja dying without any male issue, and the necessity of ascertaining the testator 's heirs at that point of time for further devolution of the property.
It cannot, therefore, be said that ascertainment of the testator 's heirs according to the law in force at the time of happening of the contemplated contingency, was wholly beyond the ken of the testator.
In the view we take of the import and scope of Clause 5 of the Will (exhibit P. 2) ascertainment of the heirs of Palaniandi Pillai has to be done on the assumption that he died intestate, a moment after Nataraja Pillai 's death, according to Sections 8 to 10 of the .
At that point of time, the plaintiff (who would be assumed to be the widow of a "predeceased" son), and the defendants would all be heirs of the testator, falling in Class I of the Schedule referred to in Section 8.
According to Section 9, all the heirs in Class I of the Schedule shall take simultaneously, to the exclusion of all other heirs.
The distribution of the property among the plaintiff and defendants will be governed by Rules 3 and 4 in Section 10, which are as under: "Rule 3.
The heirs in the branch of each predeceased son or each predeceased daughter of the intestate shall take between them one share.
" "Rule 4.
The distribution of the share referred to in Rule 3 (i) among the heirs in the branch of the predeceased son shall be so made that his widow (or widows together) and the surviving sons and daughters get equal portions; and the branch of predeceased sons gets the same portion; (ii) among the heirs in the branch of the predeceased daughter shall be so made that the surviving sons and daughters get equal portions.
" 708 In accordance with the aforesaid provisions of the , the plaintiff would be entitled to get 1/3rd share in Schedule I property in which her husband had a life interest, while the remaining 2/3rd share in the property shall be equally distributed among the two branches of the defendants, the branches of Ramaswami and Vadivelu getting 1/3rd share each.
For the foregoing reasons, we allow this appeal, set aside the judgment of the High Court and pass a preliminary decree for partition and separate possession in favour of the plaintiff with respect to her 1/3rd share in the suit property.
In the circumstances of the case, the parties are left to pay and bear their own costs.
P.B.R. Appeal allowed.

summary/full:
By a will the testator bequeathed certain properties to each of his three sons.
With regard to his third son (NP) the testator provided in Clause 5 of the will that if he had no male issues "my heirs shall take the aforesaid properties" after his life time.
NP died in 1957 without any male issue.
His widow (plaintiff appellant) filed a suit for declaration of her title to the properties on the ground that her husband got the same absolutely by way of partition and that she, as his heir, inherited the properties or in the alternative for a declaration of her right to the properties on a true construction of the testator 's will.
(Defendants 1 and 2 were the sons of the testator 's eldest son while defendants 3 to 7 were the daughters and defendant 8 the widowed daughter in law of the testator 's second son.) The trial judge of the High Court decreed the plaintiff 's suit holding that on the termination of the life interest given to NP who died sonless the properties devolved on the heirs of the testator as if on intestacy, that the plaintiff was entitled to 1/3 share of the properties, and that the remaining 2/3 share should be share by the defendants.
Defendants 1 and 2 appealed to a Division Bench of the High Court, claiming that as the only heirs of the testator they were entitled to get the entire property of NP who had only a life interest in it.
Construing cl. 5 of the will, the Division Bench held : (1) that by his will the testator had made his heirs as an "artificial" class of ultimate residuary legatees; (2) that the mandate implicit in the words "if there are no male issues as aforesaid" is that such class of legatees or heirs of the testator would be ascertained and worked out at that point of time when NP died sonless and at no other; (3) that this class of heirs of the testator was to be ascertained on the death of NP on the hypothesis that the testator had been upto the time of NP 's death, but according to orthodox Hindu Law prevailing at the time of the testator 's death in 1928; (4) that neither Hindu Women 's Right to Property Act, 1937, nor the was applicable because the testator actually died long before the coming into force of these two enactments and he did not die intestate; (5) that according to Hindu Law prevailing at the time of the testator 's death in 1928, respondents 1 and 2 would be the only persons entitled to the property on the death of NP, to the exclusion of the latter 's widow, the plaintiff.
701 Allowing the appeal.
^ HELD: 1(a) On a proper construction of the will the testator could not be said to have created or carved out an "artificial" class of heirs and made a residuary bequest in their favour.
It is well established that the term "heirs" used in a will must be construed in a legal sense and cannot normally be limited to "issues" only.
It must mean all persons who are entitled to the property of another under the law of inheritance.
[705E F] Angurbala Mullick vs Debabrata Mullick, [1951] 2 SCR 1125 at p. 1144; referred to.
(b) The expression "my heirs" used in cl. 5 of the will must be construed as equivalent to "my legal heirs".
The words "if there are no male issues my heirs shall take the aforesaid properties" are not words of gift over to any artificial class of heirs.
[705G] 2.
Construction of clause 5 of the will brings out expressly or by inevitable implication, these instructions of the testator: (a) In the event of NP 's death, without male issue, the property would devolve on the testator 's heir.
(b) Such heirs of the testator would be ascertained according to Hindu Law of intestate succession.
(c) Ascertainment of these "heirs" of the testator, is to be done at the time of NP 's death on the hypothesis that the testator lived up to and died a moment after NP 's death.
(d) It logically follows from (a), (b) and (c) that these heirs of the testator would be ascertained according to the , which was the law in force on 31 1 57 when NP died sonless and succession opened out.
[706 D F] 3.
On the port and scope of cl. 5 of the will, as spelled out above, ascertainment of the testator 's heirs on whom the property would devolve on NP 's death, is to be done according to sections 8 to 10 of the .
At that point of time, the plaintiff (who would be assumed to be the widow of a "predeceased" son) and the defendants would all be the heirs of the testator, falling in Class I of the Schedule referred to in section 8, and in accordance with Rules 3 and 4 in Section 10 of the Act, the plaintiff would be entitled to 1/3rd share, in the property, while the remaining 2/3rd share shall go equally to the branches of Ramaswami and Vedivelu.
[707 DE]


judgement:
Special Leave Petition (Civil) Nos.
5228 and 5286 of 1977.
From the Judgment and order dated 8 8 1977 of the Punjab and Haryana High Court in F.A.O. No. 81 and 82 of 1977.
P. P. Malhotra and R. N. Dikshit for the Petitioner.
section K. Gambhir for the Respondent.
The order of the Court was delivered by KRISHNA IYER, J. An explosive escalation of automobile accidents, accounting for more deaths than the most deadly diseases, has become a lethal phenomenon on Indian Roads everywhere.
The jural impact of this tragic development on our legislatures, courts and law enforcing agencies is insufficient, with the result that the poor, who are, by and large, the casualty in most of these cases, suffer losses of life or limb and are deprived of expeditious legal remedies in the shape of reasonably quantified compensation promptly paid and this, even after compulsory motor insurance and nationalisation of insurance business.
The facts of this special leave petitions, which we dismiss by this order, raise two serious issues which constrain us to make a speaking order.
The first deals with legal 696 rights, literacy in the case of automobile accidents and the processual modalities which secure redressal of grievances.
The second relates to the consequences of negligence of counsel which misleads a litigant into delayed pursuit of his remedy.
Medieval roads with treacherous dangers and total disrepair, explosive increase of heavy vehicles often terribly overloaded and without cautionary signals, reckless drivers crazy with speed and tipsy with spirituous potions, non enforcement of traffic regulations designed for safety but offering opportunities for systematised corruption and little else and, as a cumulative effect, mounting highway accidents demand a new dimension to the law of torts through no fault liability and processual celerity and simplicity in compensation claims cases.
Social justice, the command of the Constitution is being violated by the State itself by neglecting road repairs, ignoring deadly overloads and contesting liability after nationalising the bulk of bus transport and the whole of general insurance business.
The jurisprudence of compensation for motor accidents must develop in the direction of no fault liability and the determination of the quantum must be liberal, not niggardly since the law values life and limb in a free country in generous scales.
In the present case, a doctor and his brother riding a motor cycle were hit, by a jeep driver and both were killed.
The fatal event occurred in November 1971 but the Motor Accident Claims Tribunal delivered judgment five years later awarding sums of Rs. 80,000/ and Rs. 73,500/ to the two sets of claimants.
The delay of five years in such cases is a terrible commentary on the judicial process.
If only no fault liability, automatic reporting by the police who investigate the accident in a statutory proforma signed by the claimants and forward to the tribunal as in Tamil Nadu and decentralised empowerment of such tribunals in every district coupled with informal procedures and liberation from court fees and the sophisticated rules of evidence and burden of proof were introduced easy and inexpensive if the State has the will to help the poor who mostly die in such accidents law 's delays in this compassionate jurisdiction can be banished.
Social justice in action is the measure of the State 's constitutional sensitivity.
Anyway, we have made these observation hopefully to help focus the attention of the Union and the States.
The nationalised insurance company appealed to the High Court against the award.
We have no doubt that the finding on both the 697 culpability and the quantum as rendered by the trial court are correct.
But the High Court dismissed the appeal on the ground of delay, dismissing the application of the petitioner for condonation under section 5 of the Limitation Act.
The Accident Claims Tribunal pronounced its award on September, 15, 1976, after making the necessary computations and deductions.
The appeal had to be filed on or before January 19, 1977 but was actually filed 30 days later.
Counsel for the petitioner is stated to have made the mistake in the calculation of the period of limitation.
He had intimated the parties accordingly with the result that the petitioner was misled into instituting appeal late.
The High Court took the view that the lawyer 's ignorance about the law was no ground for condonation of delay.
Reliance was placed on some decisions of the Punjab High Court and there was reference also to a ruling of the Supreme Court in ; The conclusion was couched in these words: "The Assistant Divisional Manager of the Company appellant is not an illiterate or so ignorant person who could not calculate the period of limitation.
Such like appeals are filed by such companies daily.
The facts of this case clearly show, as observed earlier, that the mistake is not bonafide and the appellant has failed to show sufficient cause to condone the delay.
" We are not able to agree with this reasoning.
A company relies on its Legal Adviser and the Manager 's expertise is in company management and not in law.
There is no particular reason why when a company or other person retains a lawyer to advise it or him on legal affairs reliance should not be placed on such counsel.
Of course, if there is gross delay too patent even for layman or if there is incomprehensible indifference the shield of legal opinion may still be vulnerable.
The correct legal position has been explained with reference to the Supreme Court decision in a judgment of one of us in AIR 1971 Ker. 211: "The law is settled that mistake of counsel may in certain circumstances be taken into account in condoning delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground.
It is always a question whether the mistake was bonafide or was merely a device to cover an ulterior purpose such as laches 698 on the part of the litigant or an attempt to save limitation in an underhand way.
The High Court unfortunately never considered the matter from this angle.
If it had, it would have seen quite clearly that there was no attempt to avoid the Limitation Act but rather to follow it albeit on a wrong reading of the situation." "The High Court took the view that Mr. Raizada being an Advocate of 34 years ' standing could not possibly make the mistake in view of the clear provisions on the subject of appeals existing under Section 39(1) of the Punjab Courts Act and therefore, his advice to file the appeal before the District Court would not come to the rescue of the appellant under Section 5 of the Limitation Act.
The Supreme Court upset this approach." "I am of the view that legal advice given by the members of the legal profession may sometimes be wrong even as pronouncement on questions of law by courts are some times wrong.
An amount of latitude is expected in such cases for, to err is human and lay men, as litigants are, may legitimately lean on expert counsel in legal as in other departments, without probing the professional competence of the advice.
The court must of course, see whether in such cases there is any taint of mala fides or element of recklessness or ruse.
If neither is present, legal advice honestly sought and actually given, must be treated as sufficient cause when an application under Section 5 of the Limitation Act is being considered.
The State has not acted improperly in relying on its legal advisers.
" We have clarified the legal position regarding the propriety and reasonableness of companies and other persons relying upon legal opinion in the matter of computation of limitation since it is a problem which may arise frequently.
If Legal Adviser 's opinions are to be subjected by company managers to further legal scrutiny of their own, an impossible situation may arise.
Indeed Government, a large litigant in this country, may find itself in difficulty.
That is the reason why we have chosen to explain at this length the application of section 5 vis a vis counsel 's mistake.
This does not automatically secure a visa for the petitioner into this Court under Article 136.
There must be manifest injustice or gross misappreciation or perversity in factual findings.
We have 699 examined the merits of the matter to the extent available on the record and have heard counsel for the petitioner.
He has hardly convinced us that the merits of the case call for any intervention at all.
In this view we are constrained to dismiss the Special Leave Petitions now that we have expressed ourselves or both the points dealt with above.
S.R. Petitions dismissed.

dataset_name: IN-Abs

summary/full:
A doctor and his brother riding a motor cycle were hit by a jeep driver and both were killed in November 1971, but the Motor Accident claims Tribunal delivered judgment on 5 9 1976 five years later awarding sums of Rs. 80,000/ and Rs. 73,500/ to the two sets of claimants.
The appeal in this case had to be filed on or before 19 1 77 but was actually filed 30 days later with an application for condonation under section 5 of the Limitation Act on the ground of Counsel 's mistake in the calculation of the period of limitation.
The High Court dismissed the appeal and the application.
Dismissing the special leave petitions, the Court ^ HELD: A company relies on its Legal Adviser and the Manager 's expertise is in company management and not in law.
There is no particular reason why when a company or other person retains a lawyer to advise it or him on legal affairs reliance should not be placed on such counsel.
Of course, if there is gross delay too patent even for layman or if there is in comprehensible indifference the shield of legal opinion may still be vulnerable.
If legal Adviser 's opinions are to be subjected by company managers to further legal scrutiny of their own, an impossible situation may arise.
Indeed Government, a large litigant in this country, may find itself in difficulty.
[697E F, 698 F G] This does not automatically secure a visa for the petitioner into this Court under article 136.
There must be manifest injustice or gross misappreciation or perversity in factual findings.
[698H] State of Kerala vs Krishna Kurup Madhava Kurup, A.I.R 1971 Kerala 211; approved.
State of West Bengal vs Howrah Municipal Corporation, ; ; referred to.
Observations 1.
The jurisprudence of compensation for motor accidents must develop in the direction of no fault liability and the determination of the quantum must be liberal, not niggardly since the law values life and limb in a free 695 country in generous scales.
Social justice, the command of the Constitution is being violated by the State itself by neglecting road repairs, ignoring deadly over loads and contesting liability after nationalising the bulk of bus transport and the whole of general insurance business.
[696C D] 2.
Medieval roads with treacherous dangers and total disrepair, explosive increase of heavy vehicles often terribly overloaded and without cautionary signals, reckless drivers crazy with speed and tipsy with spirituous potions, non enforcement of traffic regulations designed for safety but offering opportunities for systematised corruption and little else and, as a cumulative effect, mounting highway accidents, demand a new dimension to the law of torts through no fault liability and processual celerity and simplicity in compensation claims cases.
[696B C] 3.
If only no fault liability, automatic reporting by the police who investigate the accident in a statutory proforma signed by the claimants and forwarded to the tribunal as in Tamil Nadu and decentralised empowerment of such tribunals in every district coupled with informal procedures and liberation from court fees and the sophisticated rules of evidence and burden of proof were introduced easy and inexpensive, if the State has the will to help the poor who mostly die in such accidents law 's delays in this compassionate jurisdiction can be banished.
Social justice in action is the measure of the State 's constitutional sensitivity.
[696F G]


judgement:
Civil Appeal Nos.
1831 1833 of 1972.
Appeals by Special Leave from the Judgment and Order dated 22 9 1971 of the Allahabad High Court in I.T. References Nos.
775/70 and 342/64.
section C. Manchanda and Mrs. Urmila Kapoor for the Appellant.
V. section Desai and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by TULZAPURKAR, J.
The assessee, Smt.
Indermani Jatia, widow of Seth Ganga Sagar Jatia of Khurja, carried on money lending and other businesses and derived income from various sources such as investment in shares, properties and businesses.
However, the capital, assets and income in respect of different sources of income were incorporated in one common set of books.
With a view to commemorate the memory of her deceased husband, on October 21, 1955 she promised a donation of Rs. 10 lacs for setting up an Engineering College at Khurja to be named "Seth Ganga Sagar Jatia Electrical Engineering Institute Khurja".
She also promised a further sum of Rs. 1.5 lacs for the construction of a Female Hospital at Khurja but this subsequent donation of Rs. 1.5 lacs was to include the total interest that was to accrue on the sum of Rs. 10 lacs earlier donated to the college.
In pursuance of the promise made on October 21, 1955 she actually made over a sum of Rs. 5.5 lacs by depositing the same in a joint account opened in the names of the District Magistrate, Bulandshahr and Smt.
Indermani Jatia for the college while the balance of Rs. 4.5 lacs was left with the assessee and was treated as a debt to the Institution and interest thereon at 6% per annum with effect from October 21, 1955 was to be finally deposited in the Technical Institute account.
These facts become clear from a certificate dated October 17, 1958, issued by the District Magistrate, Bulandshahr which was produced before the Appellate Tribunal.
The aforesaid transaction came to be recorded in the books of the assessee as follows: At the beginning of the accounting year (Samvat year 2012 13 accounting period 13 11 1955 to 1 11 1956) relevant to the assessment year 1957 58 the capital account of the assessee showed a net credit balance of Rs. 23,80,753.
Initially on November 21, 1955, a sum of Rs. 10 lacs was debited to her capital account and corresponding credit was given to the account of the said Institute.
At the close of the said accounting year (i.e. on 749 1 11 1956) after debiting the aforesaid sum of Rs. 10 lacs the capital account showed a net credit balance of Rs. 15,06,891.
Thereafter, during the same year of account the assessee actually paid only a sum of Rs. 5.5 lacs to the institution on January 7, 1956 from the overdraft account which she had with the Central Bank of India Ltd., Aligarh.
At the beginning of the accounting year the amount outstanding in the overdraft was Rs. 2,76,965; further overdrafts were raised during the accounting year with the result that at the end of the year the liability of the assessee to the bank was Rs. 9,55,660; among the further debits to this account during the year was said sum of Rs. 5.5 lacs paid to the Engineering College on January 7, 1956.
The balance of the promised donation, namely, Rs. 4.5 lacs was, as stated earlier, treated as a debt due by her to the Institute and accordingly she was debited with interest thereon at 6% per annum with effect from October 21, 1955.
In the assessment proceedings for the assessment years 1957 58, 1958 59 and 1959 60 the assessee claimed the deduction of three sums Rs.
20,107/ , Rs. 25,470/ and Rs. 18,445/ being the respective items of interest paid by her to the bank on Rs. 5.5 lacs during the Samvat years relevant to the said assessment years.
The assessee contended that she had preferred to draw on the overdraft account of the bank for the purpose of paying the institution in order to save her income earning assets, namely, the shares, which she would have otherwise been required to dispose of and, therefore, the interest paid by her should be allowed.
As regards interest on the remaining sum of Rs. 4.5 lacs (which was left as a loan with the assessee) that was debited to her account, the assessee urged that she was also entitled to claim the same as a permissible deduction; the claim in respect thereof, however, was made for the assessment years 1958 59 and 1959 60.
As regards the three sums paid by way of interest on Rs. 5.5 lacs to the bank, the taxing authorities took the view that said claim for deduction was not admissible either against business income under section 10(2) or against income from investments under section 12(2) of the Indian Income Tax Act, 1922.
So also the claim for deduction of interest credited to the college account on Rs. 4.5 lacs was disallowed.
The assessee preferred appeals to the Appellate Tribunal.
It was contended on behalf of the assessee that she had promised a donation of Rs. 10 lacs to the Engineering College on October 21, 1955, that the obligation to pay the said amount arose on November 21, 1955 when the amount was debited to her capital account and the corresponding credit was given to the account of the institution, and that out of this total donation a sum of Rs.5.5 lacs was actually deposited in the joint account of the 750 assessee and the District Magistrate, Bulandshahr on January 7, 1956 for which the overdraft with the Central Bank was operated and hence the interest was deductible as business expenditure.
As regards interest on Rs. 4.5 lacs that was debited to her account and credited to the Institute 's account it was urged that this balance amount was kept in trust for the institution and hence the accruing interest thereon which was debited to her account should be allowed as a deduction.
In support of these submissions a certificate issued by the District Magistrate, Bulandshahr dated October 17, 1958 was produced before the Tribunal.
The Appellate Tribunal, however, confirmed the disallowance of interest claimed in respect of the sum of Rs. 5.5 lacs holding that the said sum of Rs. 5.5 lacs over drawn from the bank was not borrowed for business purposes but was borrowed for making over the donation and, therefore, the claim could not be sustained under section 10(2) of the Income Tax Act, 1922.
As regards the interest accruing on the sum of Rs. 4.5 lacs in favour of the Engineering College, the Appellate Tribunal held that no donation of that sum had been made by the assessee, that it was at best a promise by the assessee to the District Magistrate to pay that amount for purpose of charity and the mere entries in the assessee 's own account book crediting the trust, which had yet to come into existence, would not amount to a gift or charity for a trust and as such the interest credited to the account of the Engineering College was also disallowed.
Meanwhile, Smt.
Indermani Jatia died and her legal heir Madhav Prasad Jatia was substituted in the proceedings.
On the question whether the interest on Rs. 5.5 lacs was deductible for the assessment years 1957 58, 1958 59 and 1959 60, the Tribunal declined to make any reference to the High Court, whereupon the assessee applied to the High Court under section 66(2) and upon the application being allowed, the Tribunal referred the question whether interest on the overdraft of Rs. 5.5 lacs the sums of Rs. 20,107 (for the assessment year 1957 58), Rs. 25,470 (for the assessment year 1958 59) and Rs. 18,445 (for the assessment year 1959 60) paid to the Central Bank was allowable as a deduction under section 10(2)(iii) or 10(2) (xv) of the Indian Income Tax Act, 1922 (being Income Tax Reference No. 775 of 1970).
As regards the deduction of interest on Rs. 4.5 lacs claimed for the assessment years 1958 59 and 1959 60, the Tribunal itself made a reference to the High Court under section 66(1) and referred for the opinion of the High Court the question whether in the facts and circumstances of the case the interest credited by the assessee to the account of Ganga Sagar Jatia Engineering College on the sum of Rs. 4.5 lacs 751 and accretion thereto was an admissible deduction for each of the said two years (being Income Tax Reference No. 342 of 1964).
The High Court heard and disposed of both the references by a common judgment dated September 22, 1971.
In the Reference No. 775 of 1970, the case of the assessee was that there was an obligation to pay Rs. 10 lacs to the Engineering College, that for the time being the assessee decided to pay Rs. 5.5 lacs, that it was open to the assessee to pay the amount from her business assets or to preserve the business assets for the purposes of earning income and instead borrow the amount from the bank and that she had accordingly borrowed the amount from the bank and, therefore, since the borrowing was made to preserve the business assets, the interest thereon was deductible under section 10(2) (iii) or 10(2) (xv) of the Act.
The High Court observed that there was nothing to show that the assessee would necessarily have had to employ the business assets for making payment of that amount, and secondly, it was only where money is borrowed for the purposes of business that interest paid thereon becomes admissible as a deduction, and since, in the instant case, the sum of Rs. 4.4 lacs was admittedly borrowed from the Bank for making payment to the Engineering College it was not a payment directed to the business purposes.
According to the High Court the mere circumstance that otherwise the assessee would have to resort to the liquidation of her income yielding assets would not stamp the interest paid on such borrowings with the character of business expenditure.
After referring to the decisions one of the Bombay High Court in Bai Bhuriben Lallubhai vs Commissioner of Income Tax, Bombay North Cutch and Saurashtra and the other of the Calcutta High Court in Mannalal Ratanlal vs Commissioner of Income Tax Calcutta, the High Court rejected the contention of the assessee and held that interest paid on Rs. 5.5 lacs in any of the years was not deductible either under section 10(2) (iii) or 10(2) (xv) of the Act and answered the questions against the assessee.
As regards the question referred to it in Income Tax Reference No. 342 of 1964, the High Court took the view that there was nothing on record before it to establish that the assessee had actually donated the entire amount of Rs. 10 lacs to the Engineering College, that the certificate issued by the District Magistrate, Bulandshahr on October 17, 1958 merely showed that a balance of Rs. 4.5 lacs was left as a loan with the assessee and that the interest accruing thereon from the date of the initial donation "was to be finally deposited in the account of the Technical Institute" and that though the assessee had made 752 entries in her account books crediting the trust with the interest on the amount, the trust had not yet come into existence and as such the amount credited represented her own funds and lay entirely within her power of disposition.
With such material on record, the High Court confirmed the Tribunal 's view that Rs. 4.5 lacs had not been donated by the assessee on October 21, 1955 in favour of the Engineering College and, therefore, the interest credited by the assessee in favour of the Institute on the said sum and the accretion thereto continued to belong to the assessee and as such she was not entitled to the deduction claimed by her and accordingly the question was also answered against the assessee.
On obtaining special leave the original assessee represented by her legal heir has preferred Civil Appeals Nos.
1831 1833 of 1972 to this Court.
Mr. Manchanda appearing for the appellant has raised two or three contentions in support of the appeals.
In the first place he has contended that though the deduction claimed by the assessee in this case was on the basis of business expenditure falling under either section 10(2)(iii) or 10(2)(xv), the taxing authorities, the Tribunal and the High Court have confused the issue by considering the claim for deduction under section 12(2) of the Act.
According to him the scope for allowing the deduction under section 10(2)(iii) or 10(2)(xv) was much wider than under section 12(2) of the Act.
He urged that by applying the ratio of the decision in Bhuriben 's case (supra), which was admittedly under section 12(2) of the Act, to the facts of the instant case the lower authorities as well as the High Court had adopted a wrong approach which led to the inference that the deduction claimed by the assessee was not admissible.
Secondly, he urged that considering the case under section 10(2) (iii) or 10(2) (xv) the question was when could the obligation to pay Rs. 10 lacs to the Engineering College be said to have been incurred by the assessee and according to him such obligation arose as soon as the donation or gift was complete and in that behalf placing reliance upon the certificate dated October 17, 1958, issued by the District Magistrate, Bulandshahr, as well as the entries made by the assessee in her books, he urged that the gift was complete no sooner the capital account of the assessee was debited and the college account was credited with the said sum of Rs. 10 lacs on November 21, 1955, especially when her capital account had a credit balance of Rs. 15,06,891 after giving the debit of Rs. 10 lacs; the gift in the circumstances would, according to him, be complete then as per decided cases such as Gopal Raj Swarup vs 753 Commissioner of Wealth Tax, Lucknow Naunihal Thakar Dass vs Commissioner of Income Tax, Punjab.
He further urged that though the sum of Rs. 5.5 lacs was actually paid by the assessee by borrowing the amount on January 7, 1956 from the overdraft account with the Central Bank of India Ltd. the said overdraft was a running overdraft account opened by her for business purposes and if from such overdraft account any borrowing was made interest thereon would be deductible under section 10(2)(iii) or 10(2) (xv) as being expenditure incurred for the purposes of the business.
According to him, once a borrowing was made from an overdraft account meant for business purposes, the ultimate utilization of that borrowing will not affect the question of deductibility of interest paid on such borrowing under section 10(2) (iii) or 10(2) (xv) and in that behalf he placed reliance upon two decisions of the Bombay High Court, namely, Commissioner of Income Tax, Bombay City II vs Bombay Samachar Ltd., Bombay and Commissioner of Income Tax, Bombay City IV vs Kishinchand Chellaram.
He, therefore, urged that the High Court had erred in sustaining the disallowance in respect of interest paid by the assessee on Rs. 5.5 lacs to the Bank in the three years in question as also the disallowance in regard to the interest credited by the assessee to the account of the Engineering College in the two years in question on the sum of Rs. 4.5 lacs and the accretion thereto.
On the other hand, Mr. Desai for the Revenue, disputed that there was any confusion of the issue or that any wrong approach had been adopted by the lower authorities or by the High Court as suggested by learned counsel for the appellant.
He pointed out that initially the assessee had specifically raised the plea that the borrowing of Rs. 5.5 lacs had been resorted to with a view to save income yielding investments, namely, the shares and, therefore, both the alternative cases as to whether the interest paid on Rs. 5.5 lacs was an admissible deduction either against business income under section 10(2) (iii) or income from investments under section 12(2) were considered by the taxing authorities and the taxing authorities held that such interest was not admissible under either of the provisions.
He pointed out that so far as the Tribunal and the High Court were concerned the assessee 's claim for deduction under section 10(2) (iii) or 10(2) (xv) had been specifically considered and negatived.
He sought to justify the view of the Tribunal and the High Court in regard to the disallowance of interest paid by 754 the assessee on the sum of Rs. 5.5 lacs to the Bank in the three concerned assessment years as also the disallowance of interest credited by the assessee to the account of the Engineering College on the sum of Rs. 4.5 lacs and the accretion thereto; as regards the sum of Rs. 5.5 lacs he contended that the real question was not as to when the obligation to pay to the college was incurred by the assessee but whether the obligation incurred by the assessee was her personal obligation or a business obligation and whether the expenditure by way of payment of interest to the Bank was incurred for the purpose of carrying on business and as regards the sum of Rs. 4.5 lacs whether the trust in favour of the college had at all come into existence on October 21, 1955 or November 21, 1955 as contended for by the assessee and on both the questions the view of the Tribunal and the High Court was right.
As regards the two Bombay decisions, namely Bombay Samachar 's case (supra) and Kishinchand Chellaram 's case (supra), he urged that the ratio of the decisions was inapplicable to the instant case.
At the outset we would like to say that we do not find any substance in the contention of learned counsel for the appellant that there has been any confusion of the issue or that any wrong approach has been adopted by the taxing authorities, the Tribunal or the High Court.
After going through the Tribunal 's order as well as the judgment of the High Court we are clearly of the view that the case of the assessee has been considered both by the Tribunal as well as by the High Court under section 10(2) (iii) or 10(2) (xv) and not under section 12(2).
In fact, in Reference No. 775 of 1970 the questions framed by the Tribunal in terms referred to section 10(2)(iii) and 10(2) (xv) and proceeded to seek the High Court 's opinion as to whether the sums representing interest paid by the assessee to the Central Bank on the overdraft of Rs. 5.5 lacs for the concerned three years were allowable as a deduction under either of the said provisions of the Act and the High Court after considering the matter and the authorities on the point has come to the conclusion that such interest was not allowable as a deduction under either of the said provisions It is true that the High Court did refer to the decision of the Bombay High Court in Bai Bhuriben 's case (supra) but that decision was referred to only for the purpose of emphasizing one aspect which was propounded by that Court, namely, that the motive with which an assessee could be said to have made the borrowing would be irrelevant and that simply because the assessee in that case had chosen to borrow money to buy jewellery it did not follow that she had established the purpose required to be proved under section 12(2) that she borrowed the money in order to maintain or preserve the fixed deposits or helped her to earn interest.
This is far from say 755 ing that the ratio of that case has been applied by the High Court to the instant case.
In fact, the High Court found that there was no material to show that the assessee in the instant case would necessarily have had to employ the business assets for making payment to charity.
The High Court actually considered the assessee 's case under section 10(2) (iii) and 10(2) (xv) and disallowed the claim for deduction under these provisions principally on the ground that the said borrowing of Rs. 5.5 lacs was unrelated to the business of the assessee.
Proceeding to consider the claim for deduction made by the assessee under section 10(2)(iii) or 10(2)(xv), we may point out that under section 10(2) (iii) three conditions are required to be satisfied in order to enable the assessee to claim a deduction in respect of interest on borrowed capital, namely, (a) that money (capital) must have been borrowed by the assessee, (b) that it must have been borrowed for the purpose of business and (c) that the assessee must have paid interest on the said amount and claimed it as a deduction.
As regards the claim for deduction in respect of expenditure under section 10(2)(xv), the assessee must also satisfy three conditions, namely, (a) it (the expenditure) must not be an allowance of the nature described in clauses (i) to (xiv), (b) it must not be in the nature of capital expenditure or personal expenses of the assessee and (c) it must have been laid out or expended wholly and exclusively for the purpose of his business.
It cannot be disputed that the expression "for the purpose of business" occurring in section 10(2) (iii) as also in 10(2) (xv) is wider in scope than the expression "for the purpose of earning income profits or gains" occurring in section 12(2) of the Act and, therefore, the scope for allowing a deduction under section 10(2) (iii) or 10(2) (xv) would be much wider than the one available under section 12(2) of the Act.
This Court in the case of Commissioner of Income Tax, Kerala vs Malayalam Plantations Ltd has explained that the former expression occurring in section 10(2) (iii) and 10(2)(xv), its range being wide, may take in not only the day to day running of a business but also the rationalisation of its administration and modernisation of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title, it may also comprehend payment of statutory dues and taxes imposed as a pre condition to commence or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of the business but, however wide the meaning of the expression may be, its limits are implicit in it; the purpose shall be for the purposes, of business, that is to say, the expenditure incurred shall be 756 for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business.
So far as the claim for deduction of interest paid by the assessee on the sum of Rs.5.5 lacs to the Bank in the three concerned years is concerned, the real question that arises for determination is whether the particular borrowing of Rs. 5.5 lacs was for the purposes of business of the assessee or not? The amount of Rs. 5.5 lacs having been actually parted with by the assessee on January 7, 1956, and having been accepted by the institute the same being deposited in the joint account of the assessee and the District Magistrate, Bulandshahr for the Engineering College, the gift to that extent was undoubtedly complete with effect from the said date.
The said payment was made by the assessee by drawing a cheque on the overdraft account which she had with the Central Bank of Indian Ltd., Aligarh.
In regard to this overdraft account the Tribunal has noted that at the beginning of the accounting year the amount outstanding in the said over draft was Rs. 2,76,965, that further overdrafts were raised during the accounting year with the result that at the end of the year the assessee 's liability to the bank in the said account rose to Rs. 9,56,660 and that among the further debits to this account during the year was said sum of Rs. 5.5 lacs paid to the college on January 7, 1956.
On a consideration of the aforesaid position of the overdraft and the other material on record, the Tribunal has recorded a clear finding of fact which has been accepted by the High Court that the said borrowing of Rs. 5.5 lacs made by the assessee from the Bank on January 7, 1956 had nothing to do with the business of the assessee but the amount was directly made over to the college in part fulfilment of the promised donation of Rs. 10 lacs with a view to commemorate the memory of her deceased husband after whom the college was to be named.
In other words the borrowing was made to meet her personal obligation and not the obligation of the business and as such expenditure incurred by the assessee by way of payment of interest thereon was not for carrying on the business nor in her capacity as a person carrying on that business.
Such expenditure can by no stretch of imagination be regarded as business expenditure.
It is true that initially on November 21, 1955 the capital account of the assessee was debited and the college account was credited with the sum of Rs. 10 lacs in the books of the assessee but in our view making of these entries in the assessee 's books would not alter the character of the borrowing nor would the said borrowing be impressed with the character of business expenditure, for, admittedly, the assessee maintained only one common set of books in which were incorporated entries pertaining to her capital, assets and income from all her different sources.
It is, therefore, clear to us that the interest that was paid on the sum 757 of Rs. 5.5 lacs to the bank by the assessee for the three concerned years was rightly held to be not deductible either under section 10(2)(iii) or under section 10(2) (xv) of the Act.
The two Bombay decisions on which reliance was placed by the counsel for the appellant, namely, Bombay Samachar 's case (supra) and Kishinchand Chellaram 's case (supra) are clearly distinguishable and do not touch the issue raised in the instant case before us.
In the former case, the assessee had during the relevant assessment years paid amounts of interest on capital which was borrowed from outsiders and had claimed deduction in respect of such interest.
It was not disputed that the capital borrowed by the assessee from the outsiders was admittedly used by the assessee for the purpose of its business.
The taxing authorities had taken the view that if the assessee had collected outstandings which were due to it from others it would have been able to reduce its indebtedness and save a part of the interest which it had to pay on its own borrowings, that the assessee could not be justified in allowing its outstandings to remain without charging any interest thereon while it was paying interest on the amounts borrowed by it, and that to the extent to which it would have been in a position to collect interest on the outstandings due to it from others, it could not be permitted to claim as an allowance interest paid by it to outsiders.
The High Court held that such a view was clearly unsustainable and observed that it is not the requirement under section 10(2) (iii) that the assessee must further show that the borrowing of the capital was necessary for the business so that if at the time of the borrowing the assessee has sufficient amount of its own the deduction could not be allowed and the High Court further took the view that in deciding whether a claim of interest on borrowing can be allowed the fact that the assessee had ample resources its disposal and need not have borrowed, was not a relevant matter for consideration.
The decision in Kishinchand Chellaram 's case (supra) was rendered in the peculiar facts which obtained in that case.
The Tribunal had recorded a clear finding that since the business of the assessee was that of banking there was no borrowal as such but only acceptance of deposits by the assessee from its clients which were made by the assessee in the course of and for the purposes of its business.
In those circumstances the Tribunal took the view that the aspect as to how these deposits, which were admittedly received by the assessee from the depositors in the course of its banking business, were subsequently utilized would not be material for the purpose of deciding the question whether interest paid by the assessee on these deposits should be allowed under section 10(2) (xv) of the Act and the High Court refused to interfere with that view of the Tribunal and rejected the Revenue 's application for a Reference.
In the instant 758 case admittedly the borrowing of Rs. 5.5 lacs had been made by the assessee to meet her personal obligation and not the obligation of her business.
The borrowing was completely unrelated to the purpose of the business and was actually used for making charity.
On these facts it will be clear that the interest paid on such borrowing cannot be allowed as deduction either under section 10(2) (iii) or 10(2) (xv).
Turning to the question of interest credited by the assessee during the assessment years 1958 59 and 1959 60 to the account of the Engineering College on the sum of Rs. 4.5 lacs and the accretion thereto the real question is whether the gift or donation of Rs. 4.5 lacs was complete and a trust of that amount came into existence in favour of the college as has been contended for by the assessee.
The only material on which reliance has been placed by the assessee in this behalf consists of the entries made in the assessee 's books of accounts and the certificate dated October 17, 1958 issued by the District Magistrate, Bulandshahr but from this material it is difficult to draw the inference suggested by the counsel for the appellant.
In our view both the Tribunal as well as the High Court were right in taking the view that the certificate dated October 17, 1958 was of no avail to the assessee inasmuch as it merely stated that the assessee had promised a donation of Rs. 10 lacs on October 21, 1955, out of which Rs. 5.5 lacs were deposited in the joint account maintained in the name of the assessee and the District Magistrate, Bulandshahr for the college and the remaining sum of Rs. 4.5 lacs was left as a loan with the assessee and interest thereon at 6% per annum was to be finally deposited in the Technical Institute account.
The Tribunal and the High Court were also right in taking the view that beyond making entries in the books of account of the assessee there was no material on record to show that the assessee had actually made over a sum of Rs. 4.5 lacs to the college or that the college had accepted the said donation with the result that the amount credited to the college account in her books represented her own funds and lay entirely within her power of disposition and that being so, the interest credited by the assessee on the said sum of Rs. 4.5 lacs and the accretion thereto continued to belong to the assessee, and, therefore, she was not entitled to the deduction in respect of such interests.
Counsel for the assessee attempted to contend that the obligation to make over the said sum of Rs. 4.5 lacs could be said to have become enforceable on the basis of promissory estoppel but in our view, no material has been placed on record by the assessee to show that acting on the promised donation the college authorities had actually incurred any expenditure towards construction or acted to their prejudice during the accounting period relevant to the assessment years 1958 59 and 1959 60 so as 759 to support the plea of promissory estoppel.
Of course, if in any subsequent years the assessee is in a position to place any material before the taxing authorities or the Tribunal or the Court which would support the plea of promissory estoppel the position in such years may be different.
It is thus obvious that if no trust in favour of the college in regard to the amount of Rs. 4.5 lacs could be said to have come into existence either on October 21, 1955 or on November 21, 1955 or on any other subsequent date during the relevant years, no deduction in respect of interest credited by the assessee to the account of the college over the said sum can be allowed.
In the circumstances, in our view, the High Court rightly answered the questions referred to it against the assessee in both the references.
The appeals are accordingly dismissed with costs.
V.D.K. Appeals dismissed.

summary/full:
The appellant assessee carried on money lending and other businesses and derived income from various sources such as investment in shares, properties and business.
Pursuant to her promise to donate a sum of Rs. 10 lacs for setting up an Engineering College to commemorate the memory of her late husband, she actually made over a sum of Rs. 5.5 lacs by depositing the same in a joint account opened in the name of the District Magistrate, Bulandshahr and Smt.
Indermani Jatia for the College.
The balance of Rs. 4.5 lacs was left with the assessee and was treated as a debt to the institution and interest thereon at 6% per annum with effect from October 21, 1955 was to be finally deposited in the technical institute account.
Though in the books of accounts, on November 21, 1955, a sum of Rs. 10 lacs was debited to her capital account and corresponding credit was given to the account of the institute, the assessee actually paid the sum of Rs. 5.5 lacs to the institution on January 7, 1956 from the overdraft account which she had with the Central Bank of India, Aligarh.
In the assessment proceedings for the assessment years 1957 58, 1958 59, 1959 60, the assessee claimed the deduction of these sums Rs.
20,107/ Rs. 25,470/ and Rs. 18,445/ being the respective items of interest paid by her to the bank on Rs. 5.5 lacs during the samvat years.
The assessee contended that she had preferred to draw on the overdraft account of the bank for the purpose of paying the institution in order to save her income earning assets, namely, the shares, which she would have otherwise been required to dispose of and therefore, the interest paid by her should be allowed.
As regards interest on the remaining sum of Rs. 4.5 lacs (which was left as a loan with the assessee) that was debited to her account, the assessee claimed that it was a permissible deduction.
The taxing authorities took the view that the claim for deduction was not admissible either against business income under section 10(2) or against income from investments under section 12(2) of the Income Tax Act, 1922.
The appeals preferred to the Appellate Tribunal failed.
The references made to the High Court went against the assessee.
Dismissing the appeals by special leave, the Court ^ HELD: 1.
Under section 10(2)(iii) of Income Tax Act, 1922, three conditions are required to be satisfied in order to enable the assessee to claim a deduction in respect of interest on borrowed capital, namely, (a) that money 746 (capital) must have been borrowed by the assessee, (b) that it must have been borrowed for the purpose of business and (c) that the assessee must paid interest on the said amount and claimed it as a deduction.
[755B C] 2.
As regards the claim for deduction in respect of expenditure under section 10(2) (xv), the assessee must also satisfy three conditions namely (a) it (the expenditure) must not be an allowance of the nature described in clauses (i) to (xiv); (b) it must not be in the nature of capital expenditure or personal expenses of the assessee and (c) it must have been laid out or expended wholly and exclusively for the purpose of his business.
[755C D] 3.
The expression "for the purpose of business" occurring in s.10(2)(iii) as also in 10(2)(xv) is wider in scope than the expression "for the purpose of earning income profits or gains" occurring in section 12(2) of the Act and, therefore, the scope for allowing a deduction under section 10(2)(iii) or 10(2)(xv) would be much wider than the one available under section 12(2) of the Act.
[755D E] Commissioner of Income Tax vs Malayalam Plantations Ltd., ; ; applied. 4.
Neither there had been any confusion of the issue nor any wrong approach had been adopted by the taxing authorities, the Tribunal or the High Court.
The case of the assessee had been considered both by the Tribunal as well as by the High Court under s.10(2) (iii) or 10(2) (xv) and not under s.12(2).
In fact, in Reference No. 775 of 1970 the questions framed by the Tribunal in terms referred to s.10(2)(iii) and 10(2)(xv) and proceeded to seek the High Court 's opinion as to whether the sums representing interest paid by the assessee to the Central Bank on the overdraft of Rs. 5.5 lacs for the concerned three years were allowable as deduction under either of the said provisions of the Act and the High Court after considering the matter and the authorities on the point had come to the conclusion that such interest was not allowable as a deduction under either of the said provisions.
[743D G] 5.
It is true that the High Court did refer to the decision of the Bombay High Court in Bhai Bhuriben 's case but that decision was referred to only for the purpose of emphasising one aspect which was propounded by that Court, namely, that the motive with which an assessee could be said to have made the borrowing would be irrelevant.
In fact the High Court found that there was no material to show that the assessee, in the instant case, would necessarily have had to employ the business assets for making payment to charity.
The High Court actually considered the assessee 's case under section 10(2) (iii) and 10(2) (xv) and disallowed the claim for deduction under these provisions principally on the ground that the said borrowing of Rs. 5.5 lacs was unrelated to the business of the assessee.
[745G H, 755A B] Bhai Bhuriben Lallubhai vs Commissioner of Income Tax, North Cutch and Saurashtra, ; explained.
(6) In the instant case: (a) The amount of Rs. 5.5 lacs having been actually parted with by the assessee on January 7, 1956, and having been accepted by the institute the same being deposited in the joint account of the assessee and the District 747 Magistrate, Bulandshahr for the Engineering College, the gift to that extent was undoubtedly complete with effect from the said date.
[756A C] (b) The said payment made by the assessee by drawing a cheque on the overdraft account was a borrowing which was made to meet her personal obligation and not the obligation of the business and as such expenditure incurred by the assessee by way of payment of interest thereon was not for carrying on the business nor in her capacity as a person carrying on that business.
Such expenditure could by no stretch of imagination be regarded as business expenditure.
[756C, F] (c) It is true that initially on November 21, 1955 the capital account of the assessee was debited and the college account was credited with the sum of Rs. 10 lacs in the books of the assessee but making of these entries in the assessee 's books would not alter the character of the borrowing nor would the said borrowing be impressed with the character of business expenditure for admittedly, the assessee maintained only one common set of books in which were incorporated entries pertaining to her capital, assets and income from all her difference sources.
The borrowing was completely unrelated to the purpose of the business and was actually used for making charity.
It is, therefore, clear that the interest that was paid on the sum of Rs. 5.5 lacs to the bank by the assessee for the three concerned years was rightly held to be not deductible either under section 10(2) (iii) or under section 10(2) (xv) of the Act.
[756F H, 757A] Commissioner of Income Tax, Bombay City II vs Bombay Samachar Ltd., Bombay, ; Commissioner of Income Tax, Bombay City IV vs Kishinchand, ; distinguished.
(d) Both the Tribunal as well as the High Court were right in taking the view that the certificate dated October 17, 1958 was of no avail to the assessee inasmuch as it merely stated that the assessee had promised a donation of Rs. 10 lacs on October 21, 1955, out of which Rs. 5.5 lacs were deposited in the joint account maintained in the name of the assessee and the District Magistrate, Bulandshahr for the college and the remaining sum of Rs. 4.5 lacs was left as a loan with the assessee and interest thereon at 6% per annum was to be finally deposited in the technical institute account.
The Tribunal and the High Court were also right in taking two views that beyond making entries in the books of account of the assessee there was no material on record to show that the assessee had actually made over a sum of Rs. 4.5 lacs to the college or that the college had accepted the said donation with the result that the amount credited to the college account in her books represented her own funds and lay entirely within her power of disposition and that being so, the interest credited by the assessee on the said sum of Rs. 4.5 lacs and the accretion thereto continued to belong to the assessee, and, therefore she was not entitled to the deduction in respect of such interests, and [758C G] (e) If no trust in favour of the college in regard to the amount of Rs. 4.5 lacs could be said to have come into existence either on October 21, 1955 or November 21, 1955 or on any other subsequent date during the relevant years, no deduction in respect of interest credited by the assessee to the account of the college over the said sum can be allowed.
[759A B] 748