judgement:
Criminal Appeal No. 287 of 1986.
From the Judgment and order dated 26.4.1985 of the Allahabad High Court in Crl.
Appeal No. 1938 of 1977.
D.P. Singh, N.P. Midha and Mrs. Rani Chhabra for the Appellant.
Prithvi Raj and D. Bhandari for the Respondent.
The Judgment of the Court was delivered by SEN, J.
This appeal by special leave directed against the judgment of the Allahabad High Court dated April 26, 1985 upholding the judgment and sentence passed by the learned Additional Sessions Judge, Kanpur dated July 11, 1977 raises the question whether the appellant was a child as defined in section 2(4) of the U.P. Children Act, 1952 and therefore was entitled to the benefit of section 29 of the Act.
The point was not taken in the High Court nor was there any such plea 1056 raised during the trial.
This was a case of triple murder.
The appellant along with his ten companions was convicted by the learned Additional Sessions Judge under section 302 read with section 149 of the Indian Penal Code, 1860 for having committed the murders of the deceased Basdeo, Anant Ram and Mahabir in furtherance of the common object of the unlawful assembly and they were each sentenced to undergo rigorous imprison ment for life.
The Court has granted special leave to the appellant Vinod Kumar alone and dismissed the special leave petitions filed by the other accused.
In this appeal, the appellant sought special leave mainly on two grounds, namely: (1) The High Court was not justified in dismissing the appeals before it without hear ing learned counsel appearing for the accused on the ground that the Court was satisfied that the appeals ought to be allowed.
And (2) The trial of the appellant Vinod Kumar and the sentence of imprisonment for life awarded upon his conviction under section 302 were vitiated in view of the deci sions of this Court in Jayendra & Anr.
vs State of U. P., ; Umesh Chandra vs State of Rajasthan, ; and Gopi Nath Ghosh vs State of West Ben gal, [1984] I SCR 803 as the appellant at the time of the incident was not even 14 years of age, his date of birth being April 18, 1959, and was a 'child ' as defined in section 2(4) of the Act and he ought to have been tried by the special court as required under section 29 and his trial by the Court of Sessions was bad in law.
We have heard Shri Dharam Pal Singh, learned counsel for the appellant at quite some length.
It was stated that the only question raised at the stage of grant of special leave, which again was the solitary point urged by him before us, was that the appellant was a child within the meaning of section 2(4) of the Act at the time of the occurrence and therefore entitled to the benefit of section 29.
The learned counsel made a statement at the bar that the other point was not pressed at the hearing of the special leave petitions, namely, that the High Court did not give a hearing to the appellant and the other accused.
Normally, it would seem unnecessary to state the facts of the case in detail as they may not be germane to the issue now sought to be raised, namely, that the High Court was not justified in dismissing the appeal preferred by the accused without giving them a hearing.
But in the facts and circumstances of the present case, we think it necessary to do so.
The facts brought out in the prosecution case clearly show that the appellant not only led the assault but also played a prominent role which resulted in the gruesome triple murder and it is incredible 1057 that he was a child at the time of the incident.
The inci dent which led to the triple murder appears to be calculat ed, preplanned and ruthlessly executed.
Briefly stated, the facts disclosed by the evidence of the prosecution are that there were two rival factions in village Pania Mau, one led by the deceased Basdeo to which the other dead persons Anant Ram and Mahabir belonged, and the other of which the appellant Vinod Kumar and his ten companions were members, and the relations between them were extremely strained.
It appears from the prosecution evidence that this ghastly incident took place on the morning of August 20, 1973 on the banks of a tank lying on the western outskirts of the village abadi which is used by the village people for purposes of bathing and washing their clothes.
At about 11.30 a.m. the three deceased Basdeo, Anant Ram and Mahabir had gone to the tank for taking bath and washing their clothes.
One of the eye witnesses Kumari Shashi Kala, PW 3, sister of the deceased Basdeo had also gone there for similar purposes.
She was at the southern burj of the tank, deceased Basdeo was on the northern burj, deceased Mahabir and Anant Ram were on the steps of the ghat on the eastern bank.
The appellant Vinod Kumar along with his companions suddenly appeared at the ghat armed with deadly weapons like gun, pistol, sword, kanta, lathi etc.
and they opened an assault on the three dead persons.
The accused almost simul taneously opened fire with his gun at the deceased Basdeo and the appellant Vinod Kumar with his pistol at the de ceased Mahabir.
Basdeo on receiving gun shot injuries jumped into the tank to swim across and take to safety.
The de ceased Mahabir was also injured by gun fire and tried to escape but fell down on receiving another gun shot fired by the accused Hanuman.
When he fell down, the accused Shiv Prasad and Ranjit Singh repeatedly hit him with their sword and kanta resulting in his instantaneous death.
The deceased Anant Ram was also assaulted by the accused Roop Ram and Gopal with their sword and kanta and he died on the spot as a result of the injuries received by him.
The appellant Vinod Kumar and the accused Hanuman then rushed to the western bank of the tank and opened fire at the fleeing Basdeo and on being hit he fell down in the field of Deo Karan.
By that time all the accused reached the spot and there he was again assaulted by the appellant and his com panions and his head was chopped off the trunk.
Thereafter, the appellant and his companions made good their escape and the accused Roop Ram carried the decapitated head of the deceased Basdeo.
The appellant abjured his guilt and complained that he had been 1058 falsely implicated due to previous animosity.
His only plea in defence at the trial as well as in the High Court was one of alibi.
It was alleged that he was a student of Intermedi ate class in C.A.V. Inter College, Allahabad and on the date of the occurrence i.e. on August 20, 1973 he was actually attending his classes in the college.
He tendered in evi dence the college attendance register and also examined Virendra Kumar Mehta, DW 1, a Lecturer in Physics in the college in support of his plea of alibi.
The learned Additional Sessions Judge and the High Court have during the course of their carefully written judgments marshalled the entire evidence and come to the conclusion that the guilt of the appellant and the other accused was proved by the prosecution beyond all reasonable doubt.
The High Court on a consideration of the evidence has come to the conclusion that there was no reason to disbelieve the unimpeachable testimony of PW 3 Kumari Shashi Kala, sister of the deceased Basdeo as well as the testimony of the three other eyewitnesses, PW 1 Ram Shanker, PW 2 Ram Swarup, brother 01 ' the deceased Mahabir and PW 6 Prayag Narain, who were undoubtedly present at the place of the incident, and have given a graphic description of the entire incident.
It observed that though these witnesses were subjected to close cross examination, the defence had failed to impeach their credibility as truthful witnesses.
The evidence of these witnesses clearly brings out that it was the appellant who led the sault which resulted in the triple murder of Basdeo, Anant Ram and Mahabir.
As to the plea of alibi raised by the appellant, both the learned Additional Sessions Judge and the High Court have recorded a finding that he has failed to substantiate that plea.
The crude attempt to establish the plea of alibi by production of the college attendance register and the examination of Virendra Kumar Mehta, DW 1 has failed.
The High Court agreeing with the learned Additional Sessions Judge has come to the conclusion that the entries in the college attendance register were forged and has passed strictures against this witness that he being a person in a responsible position, should have appeared as a witness for the defence and had not cared to uphold the dignity of his position, and by giving suborned evidence has tried to thwart the course of justice not only by his evidence but also by interpolating the college attendance register.
From the narration of the facts it is incredible that the appellant was only a child within the meaning of section 2(4) of the Act i.e. below the 1059 age of 16 years at the time of the occurrence, which is nothing but a complete afterthought.
Undeferred by the fact that the appellant had failed to establish the false plea of alibi by the production of the forged college attendance register and taking cue from the various decisions of this Court as reported in Satto & Ors.
vs State of U.P., ; ; Jayendra & Anr.
vs State of U.P., Umesh Chandra vs State of Rajasthan and Gopi Nath Ghosh vs State of West Bengal (supra) displaying the Court 's deep concern and solicitude about the treatment of juvenile offenders, the appellant is emboldened to come forward with this belated plea that he was a child within the meaning of section 2(4) of the Act and therefore the trial was vitiated by reason of section 29.
However, before we deal with the question on merits we would like to advert to unseemly features in this case.
The case presents a feature which is rather disturbing.
In the first place, there are false averments made in the special leave petition in order to present a distorted picture of the hearing of the appeals in the High Court.
Secondly, there are wild and unfounded allegations made against the learned Judges in an attempt to destroy their credibility and create doubt about the correctness of the judgment appealed from.
As to the first aspect, the legal advisors of the appellant and the other accused have gone to the extent of making out an entirely false case, namely, .that the High Court did not give a hearing to them.
Merely because the learned counsel disdained from raising the point at the stage of grant of special leave, does not imply that we should not take notice of the facts alleged.
We shall indeed be failing in our duty if we do not comment upon the conduct of the appellant and the other accused and their legal advisors in trying to create prejudice against the High Court.
It is averred in paragraph 13 of the special leave petition that the appeals were taken up for hearing on April, 1, 1985 at 3.15 p.m. and that day only the names of the accused, weapons, sections and sentences, date and time of the occurrence etc.
were given out when the Court rose for the day at 3.45 p.m.
It is then averred in para 14 that on the next day i.e. on the 2nd, the appeals could not be taken up.
They were taken up on the 3rd at 2.10 p.m. when the case was called out when Shri Chandra Shekhar Saran and Shri P.C. Chaturvedi, the two senior counsel along with Sarvashri Dharam Pal Singh, G.S. Chaturvedi and A.K. Sachan appeared.
It is alleged that when the case was called out and Shri Chandra Shekhar Saran wanted to argue the appeals, the learned Judges said that they had seen the case and they did not want to hear the appellants but wanted to hear the State counsel.
At this point, it is said that Shri P.C. Chaturvedi pointed out the age of the appellant Vinod Kumar and thereupon one 1060 of the Judges (Honable Mr. Justice X who delivered the judgment) observed that since they wanted to allow the appeals, therefore, they did not want to hear the appellants and if need be.
they would call upon them later.
It is then alleged that the Court called upon the State as to how it supported the judgment as two of the four eye witnesses had been disbelieved by the learned Additional Sessions Judge and the remaining two witnesses were partisan witnesses, one of whom being PW 3 Kumari Shashi Kala, who was a young girl of 15 years and would not go to the tank alone at that time.
It is further alleged that after the prosecution had placed the evidence of PW 2 Ram Swarup, the Court was not satisfied and reserved the judgment.
At this stage, it is said, Shri P.C. Chaturvedi again tried to point out the age of the appellant but Mr. Justice X observed that when the veracity of the two eyewitnesses was doubtful there remained no need to proceed further.
The Court rose at 3.45 p.m.
The allega tions in paras 14 to 17 are that the Judges gave an impres sion at the conclusion of the hearing on April 3, 1985 that the appeals would result in an acquittal while they pro nounced the judgment on the 28th dismissing the appeals and it is then averred in para 17 that this decision came as a shock to the counsel appearing for the accused.
There is nothing on record to substantiate these allegations apart from the letter written by Shri Dharam Pal Singh to the counsel in this Court to file the special leave petition to which we shall presently refer.
In view of the conduct of the appellant and the other accused and their legal advisors we are not prepared to act on the assertion in the letter written by Shri Dharam Pal Singh.
If there was any truth in this assertion, it was expected that the learned Judges would have made a mention of the fact that a contention was advanced on behalf of the appellant that he was a child within the meaning of section 2(4) of the Act for whatever it was worth.
We feel deeply concerned that the appellant and the other accused do not rest themselves by making this false assertion that they were not heard by the High Court but they have gone further and made wholly wild and unfounded allegations against the learned Judges casting serious aspersions on them.
They have brought into existence certain correspondence in an attempt to create prejudice against the learned Judges.
We fail to see the propriety of placing copies of these two letters unless it was with a view to create doubts and suspicion about the integrity of the learned Judges.
It shows that the appellant and his legal advisors can go to any extent to secure a reversal of the judgment of the High Court upholding the conviction of the appellant for having committed offences of murder punishable under section 302 read with section 149 of the Indian Penal Code.
First is a letter 1061 dated April 23, 1985 i.e. just three days before the deliv ery of the judgment, said to have been written by Shri K.L. Grover to the accused Ram Gopal Sachan.
We understand that Shri Grover is comparatively a senior counsel practicing in the High Court at Allahabad.
The letter of Shri Grover appears to be written in response to a letter written by the accused dated April 20, 1985 seeking his assistance.
Shri Grover naturally expressed his resentment and displeasure that the accused should have written a letter of this nature to him asking that he should try to influence the learned Judges.
It is in these terms: .lm "I was surprised and sorry after reading it.
Neither I am a Counsel in Criminal Nos. 1937 and 1938 of 1977 Hanuman and others and Vinod and others, nor I know any of them and I have no connection with these cases.
You have written about Shri D.P. Singh, Advocate.
He is a good counsel but your assertions are baseless.
I do not take part in any unscrupu lous thing.
This is correct that Hon 'ble X is my friend but he is a Judge and I am an advocate.
Decisions are not sold in the High Court.
Hon 'ble X is like all other Judges of the High Court very honest Judge.
Either you have written false thing or you have been cheated by some body.
Kindly do not correspond with me in this connection.
" The other is a letter dated May 24, 1985 addressed by Shri Dharam Pal Singh to the counsel in this Court instruct ing him to file the special leave petition, saying that as a counsel his "conscience was shocked", narrating that at the hearing the learned Judges gave the impression that this was a case which deserved acquittal and they would like to hear the prosecution counsel and thereafter, if necessary, they would hear the accused.
In the letter he asserts that on this the senior counsel Shri Chandra Shekhar Saran did not address the Court, but Shri P.C. Chaturvedi told the Court that the appellant was a child upon which one of the learned Judges observed that since they were allowing the appeal, it was not necessary to go into the question.
He then goes on to say that he and the other counsel were shocked by the judgment delivered by the learned Judges dismissing the appeals.
He also adverts to Shri Grover 's letter and men tions that he had taken the accused Ram Gopal Sachan to Shri Grover 's place and enquired about the letter since the accused denied that he had written any such letter.
Accord ing to his version Shri Grover declined to give them the letter as he did not want to get involved in any controversy and he then adds: 1062 "As counsel, we owe a duty to our client and all of us appearing on behalf of the accused feel that we have failed therein and our conscience is in distress." He then concludes by saying: "We do not know whether all these facts should be placed before the Hon 'ble Supreme Court and this decision we leave in your hands.
But we do request you to Kindly see that the hearing which we could not get for these accused (having a case for acquit tal) do get an opportunity of placing their case before the Court.
" perusal of these letters would tend to show that there was an attempt to blackmail the learned Judges.
We cannot but deprecate the conduct of the appellant and the other accused in making such wild allegations about the propriety and conduct of the learned Judges.
We have no doubt in our mind that the allegations are totally false and untrue.
It is pertinent to observe that Shri Dharam Pal Singh has chosen not to file any affidavit in support of the asser tions made by him in his letter.
The learned counsel who drafted the special leave petitions should have shown great er circumspection before casting such serious aspersions on the High Court.
We are not prepared to believe that it was mentioned before the learned Judges at the hearing of the appeals that the appellant was a child within the meaning of section 2(4) of the Act when this fact is not borne out by the judgment and there is nothing on record to substantiate the allegation.
In the facts and circumstances of this particular case, we are not prepared to countenance the argument that the appellant was a child within the meaning of section 2(4) of the Act.
After the grant of special leave, the appellant apart from his own affidavit, filed two affidavits of his father Sri Narain Sachan and an affidavit by Shri Jitendra Prasad Singh, Advocate, brother of Dharam Pal Singh.
He has also placed on record copies of certain documents, namely (1) extracts of the kutumo register in Form 'A ' of Pania Mau Gaon Sabha issued by the Village Panchayat Officer, Nyaya Panchayat, Dev Rahat.
(2) Certificate of the High School Examination, 1973 issued by the Secretary of Madhyamik Shiksha Parishad, Uttar Pradesh.
(3) Entry from the elector al roll relating to U.P. State Legislative Assembly Constit uency No. 275, Allahabad, Mohalla Buxi Khurd.
(4) Statement of the appellant recorded by the learned Additional Sessions Judge under section 3 13 of the Code of Criminal Procedure, 1973.
We have gone through these 1063 affidavits and other documents and we are not prepared to act on them.
At the hearing we asked the learned counsel to produce the original documents.
We are satisfied that the documents are of doubtful authenticity and it would be unsafe to rely upon such documents.
Such documents can always be brought into existence.
We would refer to the statement of the appellant recorded by the learned Addition al Sessions Judge on June 4, 1975 wherein the appellant stated his age to be 17 years.
Beneath the statement, there is an endorsement in ink: "The age of 17 years appears to be correct".
We are left to guess who made this endorsement.
Even assuming that the endorsement was made by the learned Additional Sessions Judge, that was only an estimate of age and does not necessarily show that the appellant was a child within the meaning of section 2(4) of the Act at the time of occurrence.
In view of the earlier attempt made by the appellant and his legal advisors to substantiate the false plea of alibi by production of forged attendance register and the tendering of evidence of Virendra Kumar Mehta, DW 1 against whom the High Court has passed strictures for sub orning himself in an attempt to thwart the course of jus tice, it is quite evident that the appellant and his legal advisors would go to any extent in creating evidence to support the false plea now taken.
In conclusion, we cannot but once again deprecate the growing tendency on the part of the unsuccessful litigants to impute unworthy motives to Judges and this has become not uncommon these days.
We frown upon the practice of making such baseless imputations against Judges and time has come for this Court to take serious notice of this unhealthy trend before it becomes a growing menace and an unmitigated evil.
We feel that the members of the bar equally share this responsibility and should ensure that uncalled for asper sions are not cast on the Judges.
Such a course, of action on their part would enhance the prestige of the Court and the legal profession.
For these reasons, the appeal must fail and is dismissed, P.S.S Appeal dis missed.

summary/full:
The appellant a student of intermediate class, was alleged to have led the attack on the rival faction along with his accomplices armed with deadly weapons like gun, pistol, sword, kanta, lathi etc.
resulting in triple murder.
He was also alleged to have opened fire with his gun at the deceased.
The trial court disbelieved his plea of alibi, that on the date of occurrence he was actually attending his classes in college, in support of which he tendered in evidence the attendance register and also examined DW 1, the lecturer in college, and he was convicted under section 302 read with section 149 of the Indian Penal Code, 1860.
The High Court in appeal affirmed the conviction.
Agree ing with the trial court it reached the conclusion that the entries in the college attendance register were forged and passed strictures against the witness.
In the appeal before this Court by special leave the appellant came forward with the belated plea that he was a child below the age of 16 years within the meaning of section 2(4) of the U.P. Children Act, 1952 and therefore, the trial was vitiated by reason of section 29 of the Act.
It was contended that in spite of repeated requests of his counsel he was not heard by the High Court Judges on the point.
While making this frivolous assertion the accused also made wild allega tions in an attempt to 1054 destroy the credibility of the Judges and create doubt about the correctness of the judgment appealed from.
To substanti ate the allegation he and his legal advisors brought into existence certain correspondence.
In support of his age he filed affidavits of his father and the advocate.
In addi tion.
he also placed on record copies of extract of the kutumo register of the Gaon Sabha, certificate of High School examination, entry from the electoral roll, and endorsement in ink below his statement recorded unders section 313 of the Code of Criminal Procedure, 1973.
Dismissing the appeal, the Court HELD: 1.1 The appellant was not a child within the meaning ors.
2(4) of the U.P. Children Act, 1952 at the time of occurrence and, therefore, was not entitled to the bene fit of section 29 of the Act.
[1062F; 1055G H] 1.2 The affidavits and the copies of documents placed on record, after the grant of the special leave extract of the kutumo register of the Gaon Sabha, certificate of High School Examination and entry from the electoral roll, in support of appellant 's age are all of doubtful authenticity and it would be unsafe to rely upon them.
Such documents can always be brought into existence.
So is the endorsement in ink below the statement of the appellant recorded by the trial court under section 313 of the Code of Criminal Procedure 1973, to the effect that "the age of 17 years appears to be correct".
Even assuming that the endorsement was made by the trial court, that was only an estimate of age and does not necessarily show that the appellant was a child within the meaning of section 2(4) of the Act at the time of occurrence.
[1062F; 1063C] 1.3 The attempt made by the appellant and his legal advisors earlier to substantiate the false plea of alibi by production of forged attendance register, and the tendering of evidence of DW 1, against whom the High Court has passed strictures for suborning himself in an attempt to thwart the course of justice, makes it evident that the appellant and his legal advisors would go to any extent in creating evi dence to support the false plea now taken.
[1063CD] The |acts brought out in the prosecution case clearly show that the incident which led to the triple murder was calculated, preplanned and ruthlessly executed, and that the appellant not only led the assault but also played a promi nent role in it.
It is incredible that he was a child below the age of 16 years at that time.
[1056H; 1057A] 2.
There is nothing on record to substantiate the allegation that 1055 the appellant was not heard by the High Court on the ques tion of his age.
If there was any truth in that assertion it was expected that the learned Judges would have made a mention of the fact that a contention was advanced on his behalf that he was a child within the meaning of section 2(4) of the Act, for whatever it was worth.
[1060DE] 3.1 The appellant and the other accused have gone fur ther and made wholly wild and unfounded allegations against the Judges of the High Court casting serious aspersions on them.
They have brought into existence certain correspond ence in an attempt to create prejudice against them.
The propriety of placing copies of the correspondence on record cannot be seen unless it was with a view to create doubts and suspicion about the integrity of the Judges.
It shows that the appellant and his legal advisors can go to any extent to secure a reversal of the judgment of the High Court.
[1060FG] 3.2 The practice of making baseless imputations on the part of unsuccessful litigants against Judges is most un healthy and this Court takes serious notice of this evil.
The members of the bar equally share this responsibility and should ensure that such uncalled for aspersions are not cast on the Judges.
The counsel who drafted the special leave petition should have shown greater circumspection.
[1063E; 1062D]


judgement:
Appeal No. 65 of 1975.
From the Judgment and Order dated 3.12.
1973 of the Gujarat High Court in I.T.R. No. 35 of 1972.
1169 T.A. Ramachandran, Mrs. J. Ramachandran and S.C. Ratelh for the Appellant.
V.S. Desai and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal by certificate is di rected against the judgment of the High Court of Gujarat.
Assessee is assessed as an individual and she derived income from "other sources" being in the shape of interest, dividends etc.
The relevant year of assessment is 1966 67.
During this year assessee claimed deduction of Rs.26986 being interest paid to Barivallabndas Kalidas Estate on loans taken by her.
The Income tax Officer found that out of the loans real investment was of a sum of Rs. 1250 only.
He disallowed the claim to the extent of Rs. 10,275 on propor tionate basis.
According to him this claim could not be admitted under section 57(iii) of the Income tax Act of 1961.
Assessee 's first appeal to the Appellate Assistant Commissioner was rejected.
The Appellate Authority relied upon the ratio of the decision of the Bombay High Court in Bai Bhuriben Ballubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra.
[1956] ITR (XXIX) 543 and dis missed the appeal.
In further appeal before the Tribunal the claim of the assessee was reiterated by contending that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted.
It was further contended that the assessee instead of liquidating the investments which were return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible in law.
The Tribunal did not accept this contention and observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
The Tribunal also relied upon the ratio of Bombay High Court decision referred to above.
As the Tribunal dismissed the appeal assessee asked for the case to be stated to the High Court and the following question was referred for its opinion: "Whether on the facts and in the circumstances of the case, 1170 payment of interest to the extent of Rs. 10.27 was not an admissible deduction under section 57(iii) of the Incometax Act?" The High Court referred to various authorities and decided against the assessee by concluding that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental.
The High Court further found that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and therefore did not come under section 57(iii) of the Act.
It is not disputed by Mr. Ramchandran for the assessee that unless the claim comes within the purview of section 57(iii) of the Act it would not be admissible as a deduc tion.
That section as far as relevant provides: "The income chargeable under the head 'income from other sources ' shall be computed after making the following deductions, namely: (i). (ii) . (iii) any other expenditure (not being in the nature of capital expenditure) laid out or expended wholly and exclusively for the pur pose of making or earning such income; P r ovided . . . . . . .
E x p l a n a t ion: . . . . . . .
In order that the claim for the deduction could be sustained, it was for the assessee to satisfy the Income tax Officer that the loan interest in respect of which is claimed as deduction was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
There is no dispute that the provi sion of section 57 of the Act corresponds to section 12(2) of the Act of 1922.
Dealing with a claim under section 12(2) of the 1922 Act this Court in Eastern Investments Ltd. vs Commissioner of Income tax, West Bengal, [ 1 summarised the position of law thus: "On a full review of the facts it is clear that this transaction was voluntarily entered into in order indirectly to facilitate 1171 the carrying on of the business of the company and was made on the ground of commercial expediency.
It therefore falls within the purview of Section 12(2) of the Income tax Act.
1922, before its amendment . . " "This being an investment company, if it borrowed money and utilised the same for its investments on which it earned income.
the interest paid by it on the loans will clearly be a permissible deduction under section 12(2) of the Income tax Act.
" In Commissioner of Income tax, West Bengal vs Rajendra Prasad Moody, 19 this Court observed: "The determination of the question before us turns on the true interpretation of section 57(iii) and it would, therefore.
be convenient to refer to that section, but before we do so, we may point out that section 57(iii) occurs in a fasciculus of sections under the heading "F Income from other sources".
Section 56, which is the first in this group of sections, enacts in sub section (1) that specified in section 14, Items A to B, shall be chargeable to tax under the head "Income from other sources" and sub section (2) includes in such income various items, one of which is "divi dends".
Dividend on shares is thus income chargeable under the head "Income from other sources".
Section 57 provides for certain deductions to be made in computing the income chargeable under the head "Income from other sources" and one of such deductions is that set out in clause (iii).
which reads as fol lows: . . . " "The expenditure to be deductible under section 57(iii) must be laid out or expended wholly and excluSively for the pur pose of making or earning such income In the said decision this Court clearly indi cated that: "It is the purpose of the expenditure that is relevant in determining the applicability of section 57(iii) and that purpose must be making or earning of income.
" The taxing authorities as also the High Court have clearly recorded a 1172 factual finding facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity.
From the order of the Tribunal as also the judgment of the High Court it appears that the assessee had taken the stand that even if the claim relating to income tax and wealth tax was not admissible.
that part of the claim relatable to annuity deposit should have been admitted as it fetched interest.
We are inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned the Tribunal and the High Court have come to the right conclusion that the dominant purpose was not to earn income by way of interest but to meet the statutory liabili ty of making the deposit.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the income.
The fact finding authorities have come to the conclusion that no part of the expenditure came within the purview of section 57(iii,) of the Act.
Mr. Ramchandran then maintained that even if there was an indirect link between the expenditure and the income earned, the claim would be admissible and relied upon the observations of Bose.
J. in Eastern Investments Case.
No attempt has been made by the assessee to point out before the taxing authorities or even before the High Court by placing the necessary facts to justify such a claim.
On mere assumptions such a point cannot be allowed to be raised here for consideration.
In fact unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
This appeal has to fail and the order of the High Court has to be affirmed.
We accordingly dismiss the appeal but leave the parties to bear their respective costs.
A.P.J. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The assessee, assessed as an individual, derived income from "other sources" in the shape of interest, dividends etc.
In the assessment year 1966 67 she claimed deduction of Rs.26,986 being interest paid on loans taken by her, under section 57(iii) of the Income Tax Act, 1961.
The income Tax Officer found that out of the loans real investment was Rs.1,250 only.
He disallowed the claim of Rs.10,275 on proportionate basis.
The Appellate Assistant Commissioner relying upon the ratio of the decision in Bai Bhuriben Lallubhai vs Commissioner of Income tax, Bombay North Cutch and Saurashtra, [1956 ITR (XXIX) 543] dismissed the appeal of the assessee.
Before the Tribunal the assessee contended: (1) that expenditure under the head of payment of income tax and wealth tax and annuity deposits should have been taken as revenue expenditure and the claim of interest in respect of such loans should have been admitted and (2) that the asses see instead of liquidating the investments which was return oriented, found it commercially expedient and viable to raise a loan instead of disturbing the investments and, therefore, the claim became admissible.
The Tribunal reject ing the contentions and dismissing the appeal observed that the loans were taken for meeting her personal obligation like payment of taxes and deposit of annuity and these had nothing to do with the business.
On reference, the High Court held that at the relevant time it was obligatory for the assessee to make the annuity deposit and the earning of interest through such deposit was merely incidental and that the portion of the loan was not intended to meet expenditure wholly and exclusively for the purpose of earning the income and.
therefore.
did not come under section 57(iii) of the Act.
1168 Dismissing the appeal of the assessee the Court.
HELD: 1.
Unless the claim comes within the purview of section 57(iii) of the Income Tax Act.
1961 it would not be admissi ble as a deduction.
[1170C] 2.
The test to apply is that the expenditure should be wholly and exclusively for the purpose of earning the in come.
[1172C] Eastern Investments Ltd. vs Commissioner of income tax, West Bengal, and Commissioner of Income tax, West Bengal vs RaJendra Prasad Moody. , followed.
In order that the claim for deduction could be sus tained, it was for the assessee to satisfy the Income Tax Officer that the loan, interest in respect of which is claimed as deduction, was laid out or expended wholly and exclusively for earning the income from out of which the deduction was claimed.
[1170F G] 4.
The Income Tax Authorities as also the High Court have clearly recorded a factual finding of facts that the expenditure in this case was to meet the personal liability of payment of income tax and wealth tax and annuity and that no part of the expenditure came within the purview ors.
57(ii) of the Act.
[1171H 1172A, D] 5.
This Court is inclined to agree with the High Court that so far as meeting the liability of income tax and wealth tax is concerned, it was indeed a personal one and payment thereof cannot at all be said to be expenditure laid out or expended wholly and exclusively for the purpose of earning income.
So far as annuity deposit is concerned.
the Tribunal and the High Court have come to the right conclu sion that the dominant purpose was not to earn income by way of interest but to meet the statutory liability of making the deposit.
[1172B C] 6.
Unless the loan is incurred for meeting the liability connected with the sources itself it would ordinarily be difficult to entertain the claims for deduction.
[1172F]


judgement:
Civil Appeal No. 144 of 1956.
Appeal by special leave from the judgment and order dated the 9th July, 1955, of the former Madhya Bharat High Court in Civil Misc.
Case No. 27 of 1954.
M. A. Khan and Ratanaparkhi, for the appellant.
section N. Bindra and R. H. Dhebar, for the respondent.
October 30.
The following Judgment of the Court was delivered by IMAM J.
This is an appeal by special leave against the order of the Madhya Bharat High Court dated July 9, 1955, rejecting an application filed by the appellant under article 226 of the Constitution.
According to the appellant, his father Habibullah died more than twenty years ago leaving behind the appellant and his brother Bashirullah as his sole heirs.
Habibullah, on his death, left immovable properties in the city of Indore.
Bashirullah, who was unmarried, went mad in 1942 and died in 1950 without any issue.
On his death, the appellant became the sole owner of all the properties left by his father Habibullah.
On September 21, 1954, the respondent purported to serve on the appellant a notice tinder section 7 of the (XXXI of 1950), hereinafter referred to as the Act.
This notice was not served on him and was never pasted on the property concerned.
Service of the notice was, according to the appellant, not proper and therefore illegal.
The appellant desiring to know on what material the notice under section 7 of the Act was issued against him applied on October 1, 1954, for copies of the record and the evidence in the possession of the respondent on the basis of which he formed the opinion that Bashirullah, at his death, had left behind a son Iqbal and a wife Kamrunnissa who had migrated to Pakistan in consequence of which the estate inherited by them from Bashirullah became evacuee property.
The application was rejected by the respondent.
818 The appellant filed a petition under article 226 of the Constitution in the Madhya Bharat High Court, which was dismissed by that Court.
The High Court was of the opinion that two questions fell to be decided in the proceedings before it (I) was the notice dated September 21, 1954, issued by the respondent under section 7 of the Act, illegal and (2) was the refusal of the respondent to supply to the appellant copies of the record and the evidence in possession of the respondent prior to the issue of notice under section 7 of the Act unlawful? Both these questions were decided against the appellant.
The notice dated September 21, 1954, was issued under section 7 of the Act in accordance with the Rules framed under section 56 of the Act.
Under section 7 of the Act the notice has to be given to persons interested in the prescribed manner.
Rule 6 of the Rules framed under the Act requires the notice to be in Form I to be served on persons interested in the property proposed to be declared evacuee property.
We have compared the notice issued in the present case with Form I of the Rules and can find no difference between them in essential particulars.
It was said that the notice in the present case does not state the grounds upon which the property concerned was proposed to be declared evacuee property and Iqbal and Kamrunnissa evacuees.
This contention is without foundation because the notice in question definitely states under the heading "Grounds" that Iqbal and Kamrunnissa migrated to Pakistan after March 1, 1947, on account of the creation of the Dominions.
The notice specifies with sufficient clarity the particulars of the property proposed to be declared evacuee property.
There was no reliable material to prove the assertion of the appellant that the notice was not properly served.
We are, accordingly, of the opinion that the notice in question has not been proved to be illegal on account of contravention of any of the provisions of the Act or the Rules made thereunder.
It was next contended that there was no material before the respondent to justify his issuing the notice and, therefore, the notice was issued without 819 jurisdiction.
Section 7 of the Act provides that where the Custodian is of the opinion that any property is an evacuee property within the meaning of the Act he may, after causing notice thereof to be given in the prescribed manner to the persons interested and after holding such enquiry in the matter, as the circumstances of the case permitted, pass an order declaring any such property to be evacuee property.
It is for the Custodian to form his opinion on such material, as was before him, and on such information which he possessed.
The notice which he issued was in Form I of the Rules framed under the Act and it stated clearly that there was credible information in possession of the respondent that lqbal and Kamrunnissa were evacuees and that the property specified in the notice was evacuee property.
It was for the respondent to decide .
whether, on the information in his possession, he should issue a notice under section 7 of the Act.
It is not for this Court or any other Court to determine whether the information in possession of the respondent was adequate to justify the issuing of the notice.
The contention on behalf of the appellant in this respect cannot be supported on any valid ground.
It was next contended on behalf of the appellant that when bona fides of the respondent bad been challenged in the High Court, that Court should have sent for the record and seen for itself as to whether there was any justification for the issue of the notice under section 7 of the Act.
In our opinion, this contention cannot prevail as there is no material on the record to justify the accusation that the respondent acted with malafides in issuing the notice.
The respondent was free to believe or not to believe the information in his possession.
The mere issue of a notice would not make the persons named therein evacuees or the property mentioned therein evacuee property.
That stage could only be reached after the notice had been issued and after the holding of such enquiry, as the circumstances of the case permitted, when an order declaring the property to be evacuee property could be made in respect of a person who was an evacuee, as defined in 104 820 the Act.
In our opinion, it was unnecessary for, the High Court to have called for the record and to have examined it for itself in order to ascertain whether the respondent was justified in issuing the notice.
We have now to consider whether the application for copies filed by the appellant was improperly rejected.
On his behalf, it was contended that the application for copies should have been allowed as section 7 of the Act contemplates only one proceeding, from the commencement to the end, including the stage prior to the issue of notice, regarding the declaration of any property as evacuee property and that that proceeding is a judicial proceeding.
Since the appel lant was a party to the proceedings under section 7 of the Act, he was entitled to have copies of the record including the evidence which constituted the proceedings.
Reliance was placed on section 49 of the Act, which states that all records prepared or registers maintained under the Act shall be deemed to be public documents within the meaning of the Indian Evidence Act and shall be presumed to be genuine until the contrary is proved.
Reference was also made to section 45 of the Act which states that for the purpose of holding an enquiry under the Act, the Custodian shall have the same powers as are vested in a civil court under the Code of Civil Procedure when trying a suit, in respect of the following matters: (a) enforcing the attendance of any person and examining him on oath; (b) compelling the discovery and production of documents; (c) any prescribed matter; and the enquiry by the Custodian shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code and the Custodian shall be deemed to be a court within the meaning of sections 480 and 482 of the Code of Criminal Procedure.
There can be little doubt that the Custodian, while holding an enquiry under section 7 of the Act is acting in a judicial capacity and that, by virtue of Rule 35 of the Rules, any party to the enquiry would be entitled to copies of any application, 821 objection, petition, affidavit, or statement made by a party or a witness and any other document.
He would also be entitled to copies of the final original order passed by the Custodian or an order passed in appeal, revision or review.
The position, however, is quite different with respect to the material in possession of the Custodian on which he formed his opinion and on which he issued notice under section 7, because at that stage he was not holding an enquiry and was, therefore, not acting in a judicial capacity.
It is a misconception of the entire scheme of the Act to suppose that an enquiry under section 7 of the Act and the issuing of a notice previous to the holding of that enquiry is a single proceeding.
When issuing a, notice under section 7 the Custodian merely has some credible information which, in his opinion, justifies him in issuing it and thereafter to enquire into the matter before making a declaration that the property is evacuee property.
That information may, after the enquiry has been concluded, turn out to be entirely insufficient for making the required declaration.
In our opinion, there are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other an enquiry under section 7 of the Act.
The proceedings commence after the issue of a notice and not previous to it.
At the second stage, a party to the proceedings would be entitled to copies of the record and the evidence from the stage of the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.
In our opinion, the appellant would have been well advised to have responded to the notice issued to him and assisted the respondent in holding the enquiry.
The respondent would have had to consider all the material before him at the enquiry before he declared the property in question evacuee property.
If the material in the enquiry was insufficient to justify such a declaration, the appellant had the right of appeal against the order of the respondent.
In our opinion, the application of the respondent for copies was rightly rejected by the respondent as he was not, 822 entitled to copies of the material before the respondent previous to the issuing of the notice under section 7 of the Act.
The appeal, accordingly, fails and is dismissed with costs.
Appeal dismissed.

summary/full:
The appellant and his brother owned certain properties inherited from their father.
The brother died and the appellant claimed to have become the sole heir.
The respondent issued a notice under section 7 of the , in respect of the share of the brother on the ground that the brother had left a widow and a son who had migrated to Pakistan.
The appellant, desiring to know on what materials the notice was issued, applied for copies of the materials on the basis of which he respondent had formed his opinion.
The application was rejected by the respondent.
The appellant filed a petition under article 226 of the Constitution in the High Court which was also dismissed.
The appellant obtained special leave and contended that the notice was issued without jurisdiction as there was no material before the respondent to justify his issuing of the notice and that the application for the copies had been improperly ejected by the respondent.
Held, that it was for the Custodian to form his opinion on such material as was before him and on such information which he possessed.
It is not for any Court to determine whether the information in the possession of the Custodian was adequate to justify the issue of a notice under section 7 of the Act: Held further, that the application for copies had been rightly rejected.
There are two stages in the process whereby any property can be declared to be evacuee property under the Act.
One is the issuing of the notice to persons interested and the other is the inquiry under section 7.
The proceedings commence after issue of the notice and not prior to it.
A party to the proceedings will be entitled to copies of the record and evidence from the stage of 817 the issuing of the notice until the conclusion of the enquiry but not previous to the issue of the notice.


judgement:
vil Appeal No. 1594 of 1973.
From the Judgment and Order dated 19.9.1972 of the Gujarat High Court in L.P.A. No. 72 of 1971.
M.V. Goswami for the Appellant.
M.N. Shroff, P.C. Kapur and T. Sridharan for the Respondent.
The Judgment of the Court was delivered by KHALID, J.
This appeal is by special leave granted by this Court on 30.10.1973 against the judgment and order of the High Court of Gujarat dated 19.9.1972 passed in Letters Patent Appeal No. 72 of 1971.
The facts necessary in brief for disposal of the appeal are as hereunder: 1085 The Deputy Charity Commissioner, Ahmedabad Region ap pointed under the Bombay Public Trust Act 1950 (for short 'the Act ') started suo motu enquiry under the Act against the appellant as Enquiry No. 578 of 1958 with regard to the nature of the properties involved in the appeal.
The Deputy Charity Commissioner held by his order dated 20.10.1960 that the properties were of a public trust.
Aggrieved by this order, the appellant filed an appeal before the Charity Commissioner.
The Charity Commissioner dismissed the appeal on 15.5.1961.
Thereupon the appellant moved the City Civil Court by filing an application under Section 72 of the Act.
This application was dismissed on 6.8.1963.
The First Appeal No. 448 of 1963, was then filed in the High Court of Gujarat against this order of the City Civil Court.
This appeal was dismissed by the High Court on 30.9.1970.
The appellant then filed Letters Patent Appeal before the High Court.
It was admitted on 25.2.1971.
However, it was dismissed on 19.9.1972 holding that the appeal was not maintainable since the requisite certificate under clause 15 of the Letters Patent was not obtained by the appellant.
Hence this appeal.
The Division Bench dismissed the appeal relying upon an earlier judgment rendered by another Division Bench of that Court reported in Hiragar Dayagar vs Ratanlal, ; This decision was rendered on 26.10.197 1.
The ratio of the decision is that the single Judge who disposed of the appeal was hearing an appeal in respect of an order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the High Court and that, therefore it was necessary for the appellant to obtain a certificate from the single Judge that the case was a fit one for appeal to the Division Bench under clause 15 of the Letters Patent Appeal.
It is this question that we have to consider in the case.
For this purpose we will first read Section 72 which is as follows: "72(1) Any person aggrieved by the decision of the Charity Commissioner under Sections 40, 41, 50 A, 70 or 70 A or on the questions whether a trust exists and whether such trust is a public trust or whether any property is the property of such trust may, within sixty days from the date of the decision, apply to the Court to set aside the said decision.
(1 A) No party to such application shall be entitled to produce additional evi dence, whether oral or documen 1086 tary, before the Court, unless the Deputy or Assistant Charity Commissioner or the Charity Commissioner has refused to admit evidence which ought to have been admitted or the Court requires any documents to be produced or any witness to be examined to enable it to pro nounce judgment or for any other substantial cause the Court thinks it necessary to allow such additional evidence: Provided that whenever additional evidence is allowed to be produced by the Court, the Court shall record the reason for its admission.
(2) The Court after taking evidence if any, may confirm, revoke or modify the decision or remit the amount of the surcharge and make such orders as to costs as it thinks proper in the circumstances.
(emphasis supplied) XX XX XX" The argument put forward before the Gujarat High Court in this case which was repeated before us also is that Section 72(1) speaks only of an application to the Court to set aside the decision of the Charity Commissioner, and it does not speak of an appeal.
It Was argued that while Sec tions 70 & 71 use the word appeal, a deliberate departure is made in Section 72 by using the word "apply" instead of the word "appeal".
On this reasoning, a case is attempted to be built up that the proceedings under Section 72 were not in the nature of an appeal and that, therefore, when the Dis trict Court exercised its jurisdiction it did not exercise an appellate jurisdiction but a special jurisdiction under the Section.
This contention was repelled by the Gujarat High Court.
It was held that though the well known word "appeal" was not used in Section 72, the absence of that word cannot be regarded as determinative of the nature of the proceedings.
The question considered was as to what was the scope, ambit and content of the proceedings before the District Court.
Now the question is as to whether it is an appellate jurisdiction, revisional jurisdiction or original jurisdiction that the District Court is exercising under Section 72.
The Court answered that it was appellate juris diction.
The District Court while dealing with an applica tion under Section 72 was given the power to confirm, revoke or modify a decision of the Charity Commissioner and the Section did not impose any fetters or limits on this power.
In an application under Section 72, the entire matter was at 1087 large before the District Court and the District Court had complete power to review the decision of the Charity Commis sioner either on law or on fact in such manner as it thought proper.
A contrary view was taken by the Bombay High Court dealing with the identical Section in the decision reported in AIR 1974, Bombay 40.
The Bombay High Court relying upon the phraseology used in Section 72 held that the proceedings under Section 72 was not in the nature of an appeal.
The question was answered in favour of the contention raised by the appellant before us as follows: "16.
If it could not be held in the present case that the court under Section 72 was itself exercising the appellate jurisdiction, undoubtedly the present appeals filed without the leave of the learned Single Judge are incompetent.
Such appeals lie only with his leave and not otherwise.
If otherwise it could be held, as the natural meaning of the expres sion suggests, that Section 72 provides a remedy by way of an application only, and though the inquiry held by the District Court seems to have some semblance of an appellate jurisdiction, it is not a jurisdiction created by the legislature as an appellate jurisdic tion.
It is only where the jurisdiction is appellate and a decision in exercise of such jurisdiction is given, and the High Court has also exercised the appellate jurisdiction, that the bar contemplated by ClaUse 15 of the Letters Patent of obtaining leave of the Court seems to come in.
We are therefore satisfied that whatever the type of function that the Court performs under Section 72 of the Act when an applica tion is received by it from any aggrieved party, it is certainly not appellate jurisdic tion as is contemplated by clause 15 of the Letters Patent.
If that is, so, the decree or the order of the District Court was not in the exercise of the appellate jurisdiction, even though the High Court exercised the appellate jurisdiction, while hearing First Appeals Nos. 830 & 831 of 1965.
" It would be useful at this stage to refer to another decision of the Bombay High Court also rendered by a Divi sion Bench reported in (1956) 58 Bombay Law Reporter 894.
There also Section 72 of the Act fell for consideration not in the context of a plea similar to the one raised before us but in the context of a plea under the Limitation Act.
1088 However, the following observations by Chagla, C.J. can be usefully extracted in support of our conclusion: "Now, although Section 72(1) confers a right upon a person aggrieved by the decision of the Charity Commissioner to apply to the City Civil Court, we must look at and consider the real nature of the right that is conferred by this sub section.
In substance, if not in form, the right is in the nature of an appeal.
The application is intended to set aside the decision of the Charity Commissioner and the City Civil Court must consider that decision, and if satisfied that the decision is errone ous must set it aside and give the necessary relief to the party aggrieved by that deci sion.
Therefore, in substance there is very little difference between an application contemplated by Section 72(1) and a right of appeal against the order of the Charity Com missioner. . . . . . . . " This decision was noted by the Bombay High Court in the decision reported in 1974 Bombay 40, but the observations therein were distinguished as follows: "15.
We will at once point out that the learned Judges who dealt with the case of had a very different proposition before them.
Primarily they were concerned with the obstacle of limitation which was being created in the way of a party by resorting to the technical provisions of Chapter 11 and more particularly Section 75 of the Act.
It is in that context when the days for obtaining copies were to be excluded that they read the remedy provided under Section 72 of the Act in a liberal way for the purpose of bringing it under the provisions of Sections 12(2) and 29(2) of the Limitation Act of 1908.
While making this liberal construction, the language used by the learned Judges is worth noting.
They point out that the application to the Court was in the nature of an appeal but they have nowhere called it as an appeal so provided by the Legislature.
While considering the nature and type of function performed by the court under Section 72, the learned Judges have construed liberally the provisions of Section 75 of the Act as also Sections 12(2) and 29(20) of the Limitation Act, 1908.
It is possible that the courts might look at 1089 the particular provisions in a liberal manner for the purpose of technical provisions like Limitation Act.
However, when it comes to the construction of provisions which awards a positive right to a party it would be appro priate that the provisions are construed in a manner which are conducive to the right of the party.
" We have considered the reasoning in the three judgments referred above.
With respect, we find it difficult to agree with the reasoning in We agree with the rea soning in the other two cases.
The slender thread on which the appellants ' arguments rests is the absence of the word "appeal" in Section 72(1).
That alone cannot decide the issue.
If the well known word "appeal" had been used in this Section that would have clinched the issue.
It is the ab sence of this word that has necessitated a closer scrutiny of the nature extent and content of the power under Section 72(1).
The power of the District Court in exercising jurisdic tion under Section 72 is a plenary power.
It is true that the Commissioner is not subordinate to the District Court but the District Court has powers to correct, modify, review or set aside the order passed by the Commissioner.
All the characteristics of an appeal and all the powers of an appel late Court are available to the District Court while decid ing an application under Section 72.
To decide this case we must be guided not only by the nomenclature used by the Section for the proceedings but by the essence and content of the proceedings.
That being so, we have no hesitation to hold that the proceedings before the District Court under Section 72(1) are in the nature of an appeal and that Dis trict Court exercises appellate jurisdiction while disposing of a matter under Section 72(1).
Consequently, the Single Judge of the High Court while deciding the appeal from the order of the District Court deals with a matter made by the District Judge in the exercise of an appellate jurisdiction by a Court subject to the superintendence of the High Court and hence clause 15 of the Letters Patent is directly at tracted.
The appeal has, therefore, to fail and is dismissed.
However, there will be no order as to costs.

summary/full:
On suo motu enquiry conducted against the appellant with regard to the nature of the properties in question, the Deputy Charity Commissioner held that the properties were of a public trust.
The appellant 's appeal before the Charity CommissiOner was dismissed.
An application filed under section 72 of the Bombay Public Trust Act, 1950 was also dismissed by the City Civil Court.
The First Appeal filed in the High Court was dismissed by a Single Judge.
In the Letters Patent Appeal on behalf of the appellant it was contended: that section 72(1) speaks only of an applica tion to the Court to set aside the decision of the Charity Commissioner, and it does not speak of an appeal; that while section 70 and 71 use the word "appeal" and that the proceedings under section 72 were not in the nature of an appeal and that, therefore.
when the District Court exercised its jurisdic tion it did not exercise an appellate jurisdiction but a special jurisdiction under 'the section.
The High Court dismissed the appeal holding that it was not maintainable since the requisite certificate under clause 15 of Letters Patent Appeal was not obtained by the appellant, that though the well known word "appeal" was not used in section 72, the absence of that word cannot be regarded as determinative of the nature of the proceedings, and that the jurisdiction that the District Court is exercising under section 72 was appellate jurisdiction.
Dismissing the appeal.
1084 HELD:1.1 The power of the District Court in exercising jurisdiction under section 72 of the Bombay Public Trust Act, 1950, is a plenary power.
It is true that the Commissioner is not subordinate to the District Court but the District Court has powers to correct, modify, review or set aside the order passed by the Commissioner.
All the characteristics of an appeal and all the powers of an appellate Court are available to the District Court while deciding an applica tion under section 72.
[1089D E] 1.2 The proceedings before the District Court under section 72(1) are in the nature of an appeal and that District Court exercises appellate jurisdiction while disposing of a matter under section 72(1).
[1089E F ] 1.3 The absence of the word "appeal" in section 72(1) does not make any difference.
[1089C] Hiragar Dayagar vs Ratanlal, ; and [1986] 58 Bombay Law Reporter 894 approved and AIR 1974, Bombay 40, disapproved.
Consequently, the Single judge of tile High Court while deciding the appeal from the order of the District Court deals with a matter made by the District Judge in the exercise of a appellate jurisdiction by a Court subject to the superintendence of the High Court and hence clause 15 of the Letters Patent Appeal is directly attracted.
[1089F G]


judgement:
Appeal No. 74 of 1975.
From the Judgment and Order dated 9.11.
1973 of the Allahabad High.
Court in L.T. Ref.
No. 722 of 1971.
S.C. Manchanda, Ms. A. Subhashini and M.N. Tandon for the Appellant.
J.P. Goyal, Rajesh, Malt Ram Bidwar.
and D.P. Mukherjee for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal is by special leave and the judgment of the Allahabad High Court on a reference under Section 256(1) of the Income Tax Act.
1961 (hereinaf ter referred to as 'the Act ') is assailed by the Revenue.
The relevant assessment year is 1965 66 corresponding to the previous year ending on 31.12.
In its return the assessee, a pri 1161 vate limited company.
disclosed capital gains of Rs.3.10,200 but claimed set off of capital loss of Rs.3.17,500 sustained by it during the assessment year 1957 58 over sale of shares to three associate concerns.
It was maintained by the asses see that the loss was sustained in the previous year rele vant to the assessment year 1957 58 and the same should be set off against the capital gains in the assessment year in question.
The Income tax Officer disallowed the claim for set off on the footing that when in the assessment year 1957 58 the loss was claimed it was excluded in the computa tion of income as capital loss and the Appellate Assistant Commissioner while disposing of the assessee 's appeal had stated that it was a notional capital loss.
As no further appeal was carried by the assessee, with the first appellate order the matter had become final.
The assessee challenged the rejection of its claim of set off before the Appellate Assistant Commissioner and he dismissed the appeal by holding that there was no genuine loss; it was essentially notional in nature and that the claim for set off to be admissible had to be notified by the Income tax Officer under Section 24(3) of the 1922 Act to the assessee by an order in writing.
That having not been done, the claim was not admissible.
Thereupon the assessee went before the Appellate Tribunal and reiterated its claim.
The Tribunal came to the .conclusion that the assessee was entitled to the benefit of set off of loss provided it satisfied that its capital loss was computed under the old Act.
In its view as the assessee had filed its return show ing the loss and the Income tax Officer neither computed the loss nor passed an adverse order, the Income tax Officer was not entitled to take advantage of his own failure and reject the assessee 's claim of carry forward and set off of loss on the ground that loss had not been determined as required under section 24(3) of the Income tax Act, 1922.
The Tribu nal further found that the Income tax Officer had clearly disallowed the assessee 's claim of revenue loss by holding that it was a capital loss.
It found that the Appellate Assistant Commissioner had no justification to hold that the claim of loss was not genuine while disposing of the appeal for the assessment year 1957 58 and ultimately allowed the assessee 's claim.
At the instance of the Revenue four ques tions were referred for opinion of the High Court.
Whether on the facts and in the circum stances of the case, the Income tax Officer 's order for the assessment year 1957 58 had not merged in the Appellate Assistant Commission er 's order in which the Appellate Assistant Commissioner had given a clear finding that the loss was notional? 1162 2.
If the answer to the above question is in the negative, whether any loss could be said to have been determined for the assessment year 1957 58, which could be carried forward to subsequent years? 3.
Whether in view of the provisions of Sec tion 80 of the Income tax Act, 1961, the loss claimed for the assessment year 1957 58 could be set off against the income determined for the assessment year 1965 66? 4.
Whether the Tribunal was justified in law in holding that the provisions in Section 24(3) regarding intimation of losses deter mined by the Income tax Officer do not.
apply to the loss falling under the head 'capital '? The High Court found that the Income tax Officer in the assessment order for 1957 58 had mentioned: "Net loss as per profit and loss account adjust Rs.3, 17,205.
(i) Loss on sale of investment being capital : Rs.3, 17,500 00 (ii) Income tax :Rs. 204 00 Total : Rs.3, 17,704 00 Income :Rs. 499 00" It is true that in appeal the Appellate Assistant Com missioner had held: "A perusal of the assessment records show that the appellant held 2,500 ordinary shares in M/s. B.R. Ltd. These shares were held on investment account and were not stock in trade of the Company.
M/s. B.R. Ltd. is an associat ed concern and the shares were sold to allied concerns and a loss of Rs.3, 17,500 was worked out.
Firstly, the shares were investment shares.
Secondly, the price for which the shares were transferred to another associated concern was a notional price.
The management just transferred the shares held by one compa ny to another company 1163 under their control and management.
Of course, the transfer was not a trading activity.
In these circumstances, I hold that the Income tax Officer has rightly disallowed the loss claimed, the same being notional capital loss.
" The High Court found that both the Income tax Officer as also the Appellate Assistant Commissioner had found that the loss was a capital loss.
The High Court fur:her found: "In our opinion this Section (Section 80 of the 1961 Act) cannot apply to a case where in law a return could not have been filed under Section 139.
That is to say in relation to assessment years prior to the coming into force of the Income tax Act, 1961 a return could not possibly have been filed under Section 139 because in these years this Sec tion was not on the Statute Book.
But if Section 80 is construed to mean that a return filed under the Income tax Act 1922 is also within its purview then in our opinion the requirement of this Section was equally ful filled because the assessee has for the as sessment year 1957 58 filed a return of loss which loss had been determined by the Income tax Officer in the assessment order.
" The High Court took the view that in the order for assessment year 1957 58.
the Appellate Assistant Commission er has referred to the claims of loss as notional when he really meant that it was an estimate.
It agreed with the conclusion of the Tribunal and found against the Revenue.
Section 24 of the 1922 Act which applied to the assess ment year 1957 58 as far as relevant provided: "(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year . . " (2A) Notwithstanding anything contained in sub section (1), where the loss sustained is a loss falling under the head 'capital gains '.
such loss shall not be set off except against any profits and gains falling under that head." 1164 (2B) Where an assessee sustains a loss such as is referred to in sub section (2A) and the loss cannot be wholly set off in accordance with the provisions of that sub section, the portion not so set off shall be carried for ward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following year and so on.
however, that no loss shall be carried forward for more than eight years . . . . . . . (3) "When, in the course of the assessment of the total income of any assessee.
it is estab lished that a loss of profits or gains has taken place which he is entitled to have set off under the provisions of this section, the Income tax Officer shall notify to the asses see by order in writing the amount of the loss as computed by him for the purposes of this section.
" The High Court has found that the Income tax Officer did compute the amount by specifying it in his assessment order.
When the assessee had made the claim and he took note of it.
his failure to comply strictly with the requirement of sub section (3) of section 24 should not be permitted to be taken advantage of by the Revenue, nor should it be used to the prejudice of the assessee.
Since set off has been claimed in the assessment year 1965 66 to which the Act of 1961 applied, it is necessary to turn attention to the relevant provisions thereof and they are in sections 74 and 80.
For convenience they are extract ed: "Section 74: (1)(a) Where in respect of any assessment year.
the net result of the compu tation under the head "capital gains" is a loss such loss shall.
subject to the other provisions of this Chapter.
be dealt with as follows: "(i) such portion of the net loss (relating to short term capital/assets as cannot be or is not wholly set off against income under any head in accordance with the provisions of section 71 shall be carried forward to the following assessment year and set off against the capital gains, if any, relating to short term capital assets assessable for that as sessment year.
and, if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following assessment year and so on.
" 1165 "(ii) such portion of the net loss as relates to capital assets other than short term capi tal assets shall be carried forward to the following assessment year and set off against the capital gains.
if any.
relating to capital assets other than short term capital assets assessable for that assessment year and.
if it cannot be so set off.
the amount thereof not so set off shall be carried forward to the following assessment year and so on: Provided that where.
in the case of any assessee not being a company.
the net loss computed in respect of such capital assets for any assessment year does not exceed five thousand rupees.
it shall not be carried forward under this section." "(b) Notwithstanding anything contained in the Indian Income tax Act. 1922 (11) of 1922), any loss computed under the head 'capital gains ' in respect of the assessment year.commencing on the 1st day of April. 1961.
or any earlier assessment year which is car ried forward in accordance with the provisions of sub section (2B) of section 24 of that Act.
shall be dealt with in the assessment year commencing on the 1st day of April.
or any subsequent assessment year as follows: (i) in so far as it relates to short term capital assets, it shall be carried forward and set off in accordance with the provisions of sub clause (i) of clause (a) and sub sec tion (2): and (ii) in so far as it relates to capital assets other than short term capital assets.
it shall be carried forward and set off in accordance with the provisions of sub clause (ii) of clause (a) and sub section (2)." "(2)(a) No loss referred to in sub section (i) of clause (a) of sub section (1) or sub clause (i) or sub clause (ii) of clause (b) of that sub section shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed under the Act or as the case may be.
the Indian Income tax Act.
1922 ( 11 of 1922).
1166 "(b) No loss referred to in sub clause (ii)of clause (a) of sub section (1) shall be carried forward under this section for more than four assessment years immediate ly succeeding the assessment year for which the loss was first computed under the Act," "Section 80: Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under Section 139 shall be carried for ward and set off under sub section (1) of Section 72 or sub section (2) of Section 73 or sub section (1) of Section 74 or sub section (3) of Section 74A." Reading the provisions of Section 74(1)(b} and Section 80 together.
we agree with the submission advanced on Behalf of the assessee that the benefit conferred under Section 24 of 1922 Act continued to be given effect to under the 1961 Act and notwithstanding the wordings of section 80 of the latter Act, the High Court was Fight in holding that the claim of set off was admissible in our view '.
on a bare analysis of these provisions, and without reference to anything more, this appeal can be disposed of.
We find that the High Court reached the correct conclusion and there is no merit in the appeal.
Accordingly.
it is dismissed with costs.
P.S.S. Appeal dismissed.

summary/full:
Sub section (3) of section 24 of the Income tax Act, 1922, required that when it was established that a loss of profits or gains had taken place.
Which the assessee was entitled to have set off, the Income tax Officer should notify to the assessee by an order in writing the amount of loss as com puted by him.
This benefit was continued in section 74 of the Income tax Act, 1961 which provides for carrying forward to the following years the net loss computed under the head 'capital gains ' in respect of an assessment year.
Section 80, however, interdicts that no loss which has not been so determined shall be carried forward and set off.
The assessee, a private limited company disclosed in its return for the assessment year 1965 66 capital gains of Rs.3 lacs and odd but claimed set off of capital loss of a like amount sustained during the assessment year 1957 58 over sale of shares.
This claim was disallowed by the Income tax Officer on the footing that when in the assessment year 1957 58 the loss was claimed it was excluded in the computa tion of income as capital loss.
A challenge to that order by the assessee was rejected by the Appellate Assistant Commis sioner who took the view that the loss was essentially notional in nature, and that the claim for set off to be admissible, had to be notified by the income tax Officer under section 24(3) of the 1922 Act to the assessee by an order in writing.
That having not been done the claim was not admissible.
Allowing the assessee 's claim, the Tribunal however, came to the conclusion that the assessee was entitled to the benefit of set off of loss provided it satisfied that capi tal loss was computed under the old Act, and as in the instant case the Income tax Officer had neither computed the loss nor passed an adverse order.
the Income tax Officer was not entitled to take advantage of his own failure and reject the assessee 's 1160 claim on the ground that loss had not been determined as required under section 24(3) of the Income tax Act, 1922.
The High Court agreed with the conclusion of the Tribu nal and found against the Revenue.
Dismissing the Appeal, the Court, HELD: Reading the provisions of section 74(1)(b) and section 80 of the Income tax Act, 1961 together makes it evident that the benefit conferred under section 24 of the 1922 Act has been continued to be given effect to under the 1961 Act.
and notwithstanding the words of section 80 of the latter Act, the claim of set off was admissible.
The conclusion reached by the High Court was.
therefore.
correct.
[1166CD] The Income tax Officer in the instant case, did compute the amount by specifying it in his assessment order.
When the assessee had made the claim and the Income tax Officer took Rote of it, his failure to comply strictly With the requirement of sub section
(3) of section 24 of the 1922 Act could not be permitted to be taken advantage of by the Revenue.
nor could it be used to the prejudice of the assessee.
[1164D]


judgement:
ivil Appeal No. 2027 of 1974.
From the Judgment and Order dated 8.10.1973 of the Gujarat High Court in Gift Tax Reference No. 3 of 1971.
Wazir Singh, K.C. Dua and Ms. A. Subhashini for the Appellants.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal is by certificate under a Deed of Partnership dated 12.11.1958, a Firm by name M/s Chhotalal Vedilal came into existence with three partners, Chhotalal Mohanlal 1044 (the assessee).
Gunvantilal Chhotalal and Pravinchandra Vedilal.
These three partners had 7 annas, 4 annas and 5 annas share respectively in the firm.
This position contin ued until on 9.11.
1961 relevant to assessment year 1963 64 with which this appeal is concerned, a change took place in the constitution of the firm.
Under the new deed, Pravin chandra Vedilal retired; no change took place in respect of Gunvantilal Chhotalal; one Ramniklal Chhotalal became a partner with 4 annas share.
The share of the assessee Chhotalal Mohanlal was reduced to 4 annas; for the remaining 4 annas two minor sons of Chhotalal being Kiritkumar and Deepak Kumar were admitted to the benefits only of the firm Kiritkumar having 12 percent and Deepak Kumar having 13 per cent.
No alteration was, however, made regarding the share capital standing in the name of the assessee.
The Gift Tax Officer came to the conclusion that the assessee had deprived himself of 19 per cent share in the profits and had gifted away 19 per cent share in the good will of the firm in favour of his two minor sons.
He valued the goodwill and treated 19 per cent thereof as taxable gift.
The Appellate Assistant Commissioner before whom the assessee appealed adopted a different stand.
According to him, the gift was not of a share of the goodwill but in respect of the right to receive future profits.
He valued that right and since the amount Was higher than what the Income tax Officer had estimated, following the requirements of law he enhanced the quantum.
In further appeal by the assessee the Tribunal held that in the circumstances of the case there could be no gift of goodwill.
As appears from the statement of the case, the Revenue did not seek to support the order of the Incometax Officer but pleaded for sustain ing the order of the Appellate Assistant Commissioner.
The Tribunal further found that the right to receive future profits could not be subject matter of a gift as the trans fer did not relate to existing property.
According to it, the situation did not give rise to any gift which could be made liable to tax under the Act.
The following question relevant for the purpose of the appeal was referred to the High Court for its opinion at the instance of the Revenue: "Whether on the facts and in the circumstances of the case, the benefit of partnership given to minors Kirit Kumar Chhotalal and Deepak Kumar Chhotalal was a gift under the Gift Tax Act, 1958?" The High Court answered the question against the Revenue and up 1045 held the view of the Tribunal.
This appeal has, therefore, been carried by the Revenue.
In spite of service of notice of appeal the respondent has not appeared.
Counsel appearing in support of the appeal has contended that the order of the Gift Tax Officer was right and the Appellate Assistant Commissioner, the Tribunal and the High Court had gone wrong in holding that the ar rangement under the deed of 9.11.1961 did not give rise to a taxable event under the Act, so far as the assessee was concerned.
"Gift" is defined in section 2(xii) of the Act: " 'Gift ' means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consid eration in money or money 's worth, and in cludes the transfer of any property deemed to be a gift under section 4.
" In support of the appeal, learned counsel further relies upon decisions of different High Courts to which we shall presently refer.
Before doing so it would be appropriate to indicate that in Khushal Khemgar Shah & Ors.
vs Khorsheed Banu Dadiba Boatwalla & Anr., ; this Court has held that goodwill of a firm is an asset, In Commission er of Gift Tax vs Nani Gopal Mondal, after referring to a number of authorities of this Court and different High Courts a Division Bench of the Calcutta High Court concluded thus: "From the cases cited above, it appears that goodwill of a partnership business is a property of the firm in which a partner is entitled to a share.
Although the above cases are under the Estate Duty Act, yet the princi ple laid down in the said cases regarding the nature of goodwill of a firm and the right of a partner in respect thereof is applicable to the instant case.
In this connection, it may be mentioned that according to section 14 of the Indian Partnership Act, property of a firm includes goodwill of the business.
Further, according to section 29(2), if a partner transfers his interest and the transferring partner ceases to be a partner, the transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled to.
It further appears that under proviso to section 53 of the Indian Partnership Act, 1046 in case of dissolution, a partner or his representative may buy the goodwill of the firm and under section 55(1) of the Act, in settling the accounts of a firm after dissolu tion, the goodwill shall, subject to contract between the parties, be included in the assets and it may be sold either separately or along with other properties of the firm .
Upon transfer, the share or interest in the property of the firm of the transferring partner including the goodwill becomes the share or interest of the transferee.
In the instant case, Nani Gopal Mondal by the deed of gift transferred his share or interest in the firm which included his share of goodwill also.
Hence, for the purpose of payment of gift tax, the value of one third share of the assessee in the goodwill shall also be taken in account." In M.K. Kuppuraj vs Commissioner of Gift Tax, the Madras High Court was called upon to deal with a case of this type where minors were admitted to the benefits of partnership firm and the assessee 's interest in the firm suffered the detriment by relinquishment of a portion of his interest.
The High Court found that relinquishment of 8 per cent profit was in favour of the minors who were admitted without any consideration.
It held that the transaction constituted a gift by the assessee in favour of the minors.
The ratio in Sirehmal Nawalkha vs Commissioner of Income Tax, as also in Commissioner of Gift Tax, Bombay vs Premji Trikamji Jobanputra, ' 17 support the stand of the Revenue that the transaction constitutes a 'gift '.
Once goodwill is taken to be property and with the admission of the two minors to the benefits of partnership in respect of a fixed share, the right to the money value of the goodwill stands transferred, the transaction does con stitute a gift under the Act.
Since there has been no dis pute about valuation of the goodwill as made by the Gift Tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill, the answer to the ques tion referred has to be in the affirmative, that is, it constitutes a gift under the Act.
The appeal is allowed and the conclusion of the High Court is reversed.
Since the respondent has not appeared, there will be no order for costs.
A.P.J. Appeal allowed.

summary/full:
Under a deed of partnership dated 12.11.1958, a firm by the name M/s. Chhotalal Vedilal came into existence with Chhotalal Mohanlal (the assessee), Gunvantilal Chhotalal and Pravinchandra Vedilal, as partners, each having 7 annas, 4 annas and 5 annas share respectively in the firm.
This position continued until on 9.11.1961 when a change took place in the constitution of the firm.
Under the new deed, Pravinchandra Vedilal retired.
One Ramniklal Chhotalal became a partner with 4 annas share.
The share of the asses see, Chhotalal Mohanlal was reduced.
For the remaining 4 annas, two minor sons of the assessee were admitted to the benefits only of the firm.
In the assessment year 1963 64, the Gift Tax Officer concluded that the assessee had deprived himself of 19% share In the profits and had gifted away 19% share in the goodwill of the firm in favour of his two minor sons.
He valued the .goodwill and treated 19% thereof as taxable gift.
In the appeal before the Appellate Assistant Commission er the assessee took the stand that the gift was not of a share of the goodwill but in respect of the right to receive future profits.
He valued that right and since the amount was higher than what the Income Tax Officer has estimated, he enhanced the quantum.
In further appeal by the assessee the Tribunal held that in the circumstances of the case there could be no gift of goodwill and found that the right to receive future profits could not be subject matter of a gift as the transfer did not relate to existing property and the situation did not give rise to any gift which could be made liable to tax under the Act.
In the Reference the High Court upheld the view of the Tribunal.
1043 In the appeal to this Court on behalf of the Revenue, it was contended that the order of the Gift Tax Officer was right and the Appellate Assistant Commissioner, the Tribunal and the High Court had gone wrong in holding that the ar rangement under the deed of 9.11.1961 did not give rise to a taxable event under the Act.
Allowing the appeal, HELD: 1.
Goodwill of a firm is an asset.
[1045E] Khushal Khemgar Shah & Ors.
vs Khorshed Banu Dadiba Boatwalla & Anr., ; , followed.
Once goodwill is taken to be property and with the admission of the two minors to the benefits of partnership in respect of a fixed share, the right to the money value of the goodwill stands transferred, the transaction does con stitute a gift under the Gift Tax Act, 1958.
[1046F] 3.
Since there has been no dispute about valuation of the goodwill as made by the Gift Tax Officer, with the conclusion that there has been a gift in respect of a part of the goodwill the transfer of the benefit of the partner ship constitutes a gift under the Act.
[1046F G] Commissioner of Gift Tax vs Nani Gopal Mondal, ; M.K. Kuppuraj vs Commissioner of Gift Tax, ; Sirehmal Nawalkha vs Commissioner of Income Tax, and Commissioner of Gift Tax, Bombay vs Premji Trikamji Jobanputra, , approved.