Madhav Prasad Jatia v. Commissioner Of Income Tax, U.p., Lucknow

MADHAV PRASAD JATIA COMMISSIONER OF INCOME TAX, U.P., LUCKNOW April 17, 1979 [P. N. BHAGWATI AND V. D. TULZAPURKAR, JJ.] Income-Tax Act 1922, Section l0(2)(iii), !0(2)(xv)-Deduction against business incorne-Condition.r 'lo be satisfied under Section 10{2)(iii) and 10(2)(.[V) for c!ain1ing deduction, explained-Words and Phrases-"For the purpose of business'', scope of. The appellant-assessee carried on money-lending and other businesses and derived income from various sources such as investment in shares, properties and business. Pursuant to her promise to donate a sum of Rs. 10 lacs for setting up an Engiiieer!~1g College to commemorate the memory of her lat'e husband, she actually made over a sum of Rs. 5.5 lacs by depositing the same in a joint account opened in the name of the District ~fagistrate, Bulandshahr aud Smt. Indcrmani Jntia for the College. The lxtlance of Rs. 4.5 lacs was left with the asscssee and V.'as treated as a debt to the institution and interest thereon at 6% per annum with effect from October 21, 1955 was to be finally deposited in the technical institute account. Though in the books of accounts, on November 21, 1955, a sum of Rs. 10 lacs was debited to her capital account and corresponding credit was given to the account of the institute, the assessec aictual1y paid the sum of ~- 5.5 lacs to the institution on January 7, 1956 from the overdraft account which she had with the Central Bank of India, Aligarh. In the assessment proceedings for the assessment years 1957-58, 1958-59, 1959-60, the assessee claimed the deduction of these sums-Rs. 20,107/- Rs. 25,470/- ood Rs. 18,445/- being th'e respective items of interest paid by her to the bank on Rs. 5.5 lacs during the samvat years. The assessee contended that she had preferred to draw on the overdraft account of the bank for the pur-pose of paying the institution in order to save her income earning assets, namely, the shares, which she would have otherwise been required to dispose of :lnd therefore, the interest paid by her should be allowed. As regards interest on the remaining sum of Rs. 4.5 lacs (which was left as a loan with the assessee) that was debited to her account, the assessee claimed that it was a permissible deduction. The taxing authorities took the view that the claim for deduction was not admissible either against business income under section 10(2) or against income from investments under section 12(2) of the Income Tax Act, 1922. The appeal!'i preferred to the Appellate Tribunal failed. The references made to the High Court went against the assessee. Dismissing the appeals by special leave, the Court HELD : I. Under section 10(2)(iii) of Income Tax Act, 1922, three am-ditions are required to be satic;fi'ed in order to enable the ru;sessee to claim a deduction in respect of interest on borrowed capital, namely, (a) that money 8-330 SCI/79 (ca.pita!) must have been borrowed by the assesse·e, (b) that it must have been borrDwcd for the purpose of business and (c) that the assessee must paid interest on the said amount and claimed it as a deduction. [7SSB-C] 2. As regards the claim for deduction in respect of expenditure under s. !0(2)(xv), the assessee must also satisfy three conditions namely (a) it (the expenditure) must not be an allowance of the nature described in clauses (i) to (xiv); (b) it must not be in the nature of capital expenditure or personal expenses of the assessee and (c) it must have been laid out or expended wholly and exclusively for the purpose of his business. [755C-D] 3. The expression "for the purpose of business" occurring in s.10(2)(iii) as also in 10(2)(xv) is wider in scope than the expression "for the purpose of earning income profits or gains" occurring in s. 12(2) of the Act and, there-fore, the scope for allowing a deduction uuder s. 10(2)(iii) or 10(2)(xv) would be much wider than the one available under s. 12(2) of the Act. [755D-EJ :47| att ATT Tae HEAT Tara WAACAU, TAL TAN, ASAT(Shri Madhav Prasad JatiaV. Commissioner of Income tax, Uttar Pradesh,Lucknow) (17 afer, 1979) (raratterafadt. ga. watate ate at. st. TewTTTAz) arraesfefrare, 1961(1961 at 43)—eaTT 10(2)(3), 10(2)(15) ate 10(2)—faetheht zara wan far wewr ree fret aad at Uta Ra wer ar PrefPedTae Bary wT Peay rat ate ee aT aT eae sat faiPrenteet cet cba et sate Ht Matar AAT IT ae THTEATYHat A He—faedt wat Taret Vast HAT at TE way atTHNuta BLATT ararFH AKarya sett a cay g—sateat ge ateteBt Ubaroz aratAD fee Araeer aga trottedat atgat aosfatedi—omac| aferacyqaTea eararerey eat Pra ar—oet uta at fretted garewale HT A aT al eg,saat arrar atutace& stadt agate sfear, a asta ae wy are ahemat odtedt ef,Teter aract a atharell’-Prethedtet 1 ae waeh aaet BT TTT Het at ate Gaal aT SH wae aie ta ae-gwitrafenaq, Tat, aratewea aeaPaat atert & Pawar 10 care we eaU TF aT ArarVaR Ga aa aT TE Tarfear Poad & fa gaat 5.50 are cou at Ufa up aaa ate F 430 weaanreqratag fagafaat [1980] 2BHo fto To FH fa sas aut aarawet A foarte Hae ast Sea aT, FATatat | We 5.50 Te WU a Ute saa Mae oH a aTT_IHaed, gua dae a ag arat war fee ag ait-Prethadt a oteay eee et Ff fae oe we 6 ofawe oe ae at at a Te Thamy ia mwa cafe asmrtatad gebae & adeanataEr & wat a ae fear wat1 Bem afattrrare SoU ar Ue aie sear aa ar at wae Peay fred faVat Got 1.50 7feat, aerate ar Pointy far STAT aT| RT 1.50 ATT TTat ute ah were wet H art Tae aac at we aT Pes 10 aeaifecnaat ft uta aa ew Fetaa at ae tate foe fasat a sataie atedPacn & ae 1.50 wr a are Paulh eeedt at Hore Ue at Cae at, At wT TAT eats aT featpraftedt & cat ard aST 10 are wy at Ufa Peart ge PrarEwf oft ate cata Gat avettacn BTS 5.50 MS WUT aT Hayachai wh wre aaxerrefac Pau dt ot| stata amr10 arechm WT feulfadt Aafar ta 7Xward4.50 are waw Pret at sear oe arate HY arena a eT Par ate6 oPaaa wha act cr sarr ag adh <et1 cite aera Prefer aa& Proffedt | at cure ta al faut Gam Trae A Tat ATTAafuacr & ag HE HC Sa UP at Bett ay Pew aE say AIATKRoomy sete arwT aH2 ate ae arene afefraeaterat 10(2)aaet(3) strat 10(2) (15) & aeftr weteit aera gare aTBoweaPernteal J sare B eT A dare Paw ae ae at settaae afer at ater at1 arene aferace ar at at aawer He we PrahaJ oreane aferae a Prege seq voTaTATaHe wea & eee ae Paor Peat fr aor ata fraihedtat atte at at atraco Foot ge carr at ufaal at aetdt &ary H ser voor at yer fae fea we Peat1 Fee TATy fatal ar sere we Hed ae faut fH tet ofa aetdt ater wetoft atte arent Paurt & eet ae am Paes adtarent-PrattedtFt 7eCe.adr ate1 serae areraa Ft atte |rhew wT ET, sO¥4 sO¥4 atutaatarrtt eithertr—oere er & fratfedt & ot5.50 are we vere Powyf set oot dataaTeaaTAY TTTwet am Pau faaet ale sah carat S HTS AraABT siATSUT TH ST FT NT S aTa aarage F ale aredfayH wT Fag aa aa a fou faa way ayi at cea a ae eresal TTT ZarePar 10(2)TH vere (15) oe & aelte fae ekme ae@ ereT at a are Aye 10(2)(3) feat atear wHata atgz(fat 10)fretted zarer Prato af 1958-59 ate 1959-60A 5.50ae we ar arateat Uface aiifaatta artsarda war fa me eae oe oe forare Pear are& at aredfaen serag vert slat & Poe gar 4.50 are SOU aT aT HeaT aay TWaT aie eat Set fer Prathedt gare acter at weg, sa Ute ararg rare ofanAF sy WaT ay1 ae wet oe Porat Het H PawPreiteal caret Paar areal ar aaare Paowarz= ae Hare Fsfafseatoft fa frethadt & aot agtardt +t fre wi F akTTT 17 THTAL, 1958 FAT ae TATU-S MT Tararer w Prat-eer gara ard Prat war g1 fare ae art a aq PasaPraraat afar & Pree Pau athe’ & Pager areata 4 arefeatgto atitatcofeaeaate ae at ar sea waawg ataut a wetfHatte17 weet,1958wer dae ag ater Paar var at fos Prefhedt 4 21 waar,1955 AY 10 are RIT seat ea ar aaa Paar at Poaw a PH 5.50ae we ve ayer ard x war ae far we of ot fos Prufhedtwie sararer afer Bar owas a Paw ete way ataie 4.50 are wre at ae ute Proffadt S ce aT Ss wrwy aie sa UP we 6 stare wfoas at ax S tafegeeteae& aret T sare set Pear rar ar.afer ate Fee eTOTAaTag We wat Hoa ote ot Pe Pretfedt & aatardt a sPafseat& afaPead ate arr tet aradt aface ox ag svafale aet &Pau wet of fas PrafPedy F vere d4.50are eae arateaT 432 [1980] 2 Ho fio Go < faye aerat arety t ge we at eta ae Poor é fared fa oeFavadt france@ fs ot ute sae (Preffedt) garr TASwidaber© aay Pears Teg ae Hae Tet ar oes ate Pores gue at4.50 qorrar st ret x aT ge rere att S are PretPeet zara We MIU at arg cH oe WaT Pa ae ere aie wedOATabtart aaghge ar eater froitct ard ate ge wae etvet at ge sae at Uae aH ara at ag aehtt & Paw eae att(#er 11) 77 'ihk.‘eaefs jei,i [1964] 53 mrfottomito 140: WAHT MAI, ATH TATA HATHA caeERsyfaiaes(Commissioner of Income Tax, Kerala V, Malayalam Plantations Ltd.); Plantations Ltd.); Ltd.); Malayalam Plantations Ltd.); Plantations Ltd.); Ltd.);8[1956] 29%f$o do Fito 543:ag arlaa aaa TIT want ATT,aa sad wee va alte(Bai Bhuriben Lallubhai V. Commissioner ofIncome-Tax, Bombay,North Cutch andSaurashtra),4 tatersr acdtcit aferenrtren: 1972 at Pater after sear 1831-1833. (1970 eh sriaene Poaar eet 775 aI 1964 F sien Pasa Gey 342 H Raeae Tee waa we cae 22Pacrax,1971 aera #1 ate afi uno dio waaearate sitetTaal HIFwit Bl wT aatt ato Tho Fare WeFAT!To Zarhqrt afacra-nferaratadtarat et wi astadt ofaar FIxHAT BT MT ABAR To Faria ay Proper sararferafe dt. st. wermeene§ Paar | suTaTae fraffedt, ated eaafo sferr whe eet a ae arcreel. A aie seat ara fafa arat ata Pay ated a cae5) Law/7I—30 (.'on1n1issioner of Income Tax v. Malayala1n Plantations Ltd., 53 ITR 140 (SC); applied. 4. Neither there had been any confusion of the issue nor any wrong approach had been adopted by the taxing authorities, the Tribunal or the Hi~h Court. The case of the assessee had been considered both by the Tribunal as ~ell as by the High Court under s.10(2)(iii) or 10(2)(xv) and not under s.12(2). In fact, in Reference No. 775 of 1970 the questions framed by the Tribunal in terms referred to s.10(2) (iii) and 10(2) (xv) and proceeded to seek the High Court's opinion as to whether the sums representing interest paid by· tile assessee to the Ce.-.tral Bank on the overdraft of Rs. 5. 5 lacs for the concerned three years were allowable as deduction under either of the said pro,·isions of the Act and the High Court after considering the matter and the authorities on the point had come to the conclusion that such interest was not allowable as a deduction under either of the said provisions. [743J>-G) 5. It is true that the High Court did refer to the decision of the Bombay High Court in Bhai Blturiben's case but that decision was referred to only for the purpose of emphasising, one aspect which was propounded by that Court, namely, that the motive with which an assessee could be said to have made the borrowing would be irrelevant. In fact the High Court found that there was no material to show that the assessee, in tho instant case, would necessarily have had to employ the business assets for making payment to charity. The High Court actually considered the assessee's case under section 10(2)(iii) and 10(2)(xv) and disallowed the claim for deduction under these provisions principally on the ground that the said borrowing of Rs. 5.5 lacs was unrelated to the business of the assessee. [754G-H, 755A-BJ Diza/ Bhuriben Lallubhai v. Commissioner of Income Tax, North Cutch and Saura•htra, 29 I.T.R., 543; explained. (6) In the instant case: (a) The amount of Rs. 5.5 lacs having been actually parted with by the :i.ssessee on January 7, 1956, and having been accepted by the institute the same being deposited in the joint account of the assessee and the District Magistrate, Bulandshahr for the Engineering College, the gift to lhal extent was undoubtedly complete with effect from the said date. [756A.q (b.) The said payment made by the assessee by drawing a cheque on the overdraft account was a borrowing which was made to meet her personal obligation and not the obligation of the business and as such Cxpenditure incurred by the assessee by way of payment of interest· thereon was not for carrying on the business nor in her capacity as a person carrying on that business. Such expenditure could by no stretch of imagination be regarded as business expenditure. [756C, Fl wit, arafcaat ser areare & att at1 wens fatwer Wet &ge aT ah ara wat Cay, arterat ate are att ot & at waat sare at afgat a amass ax at ondt et1 der ag agaAeote at arta at are wet Fi vgter & apedt it1 21 araerax,1955 H Fat 10 ee eI aT UH are feed fa wat oosetae erty ertus Prat stat ay ate Preear amr as warStaraen sfeor afacna sviteuhtr eter, cot wer aT aT,Prater a Pagfear 1.5 are setae: eae at ast ar ¢ ate at ot wn gar afsar Poor wera Par agTTT 1.5 Are VU Hare A ag are at afentad faa eataT ot fen werfaguray at vet Faw eu 10 are wae a ore ate21 FaTaT, 1955 et avdt staat ae wae a get gece: 5.50are wre Prarie,cramet astadt eaato steor & ae aat wy ayaa ad a wehagarey S Pars far1 was 4.50wre BIaT fee ae ae ae ef ag froffedt S oe gtas @ atxVers a Fe wre art fear war ar ate 21 saeax,1955 # a ot 6 ofaaa at ax a ere bo on Ft fe adecatedPebyS Had a see fear wT eT1 aE aT faaereretTHTTTT ch foartegare are fengme 17wa, 1958 aaPaar ToT H aT Ive| Mt oar g at fey attr afer Famer veraPaes2. Sree aeragre frathedt a afgat a frer ware &Saree Pao var: aay at @ rear a (@aa- asf 2012-13,&13-11-1985 F 1-11-1956 ae) ot far 1957-58 A Prater aewy fearfaq g aEave of @, ay get 23,80, freffat 753 wT & at Cot1 sTeAT ed x sta 21 gee qaTax, oar1955 BY 10 are eqe at we ute at cas Cot ard xe a sera.Pearer aor at ate afue gehae & ad wt aeraa aay Pearswe1 oe ter ae Foaer F (srerfae 1-11-1956 al) ayectae10 are Bre at Ube at ger 8a FH ae Col ard we cee TAT TT.ay faargug fag 15,06, 891 ere et| aeEaT Ae F vat at Stara ear! yr+r , OF a ates Prettadt 4 aveahaa ey a 7 aaa, 1956 at age sireare ara & ot fea ag tea dae are stout fataee,HATSay Veet aT, chat 5.50 are Ve sey et TePeat1 aterae ah TET A a Uber ateegres Fwy a weaTaT et ae 2, 76, 965way att or:tert at i cher slPca awys et faawaeaeT ae ah ser w Paalfadt a dep a ofa afer 9,55, 660WU St VAT ay| ke STs HVFS Tt ee ae F ahaa PawTT yf, 5.50 Me VaW att Titer at at aT Pe 7 owed, 1956gwitrater arte ay ara at 7S eft| seearer at we ayuta sets, 4.50 are way at, fer fee oF gaa war 2, geewT Tay aT wT fem se geeteae at Sr or ae aeqae Tat seTe 6 ataae ote ae sis arat 21 TATE, 1955 F se ute Awer PaaraT | 3.1957-58,1958-59 Ht< 1959-60 m@fareantPretn aidareat a Pretfedt +dieaetfeat—eo,107eau25,470 SIT ATT 18,445 VITU aT avat fear at foo Aa: care atqn of ot Pen set ach ant 5.50 are eIU ae oH Hae aMshrert ot fee Prefer ant & fae ware docePee aTatt Pretfeet ar aa* ag at fee set aca dae art atacerezeid & Fea al war HeaFH sedea SF wcfam ot Peet Poqe oat ve are at fret fae oferat asefsr ated & gt areSe aTRed cat Hat aah Prafee cqae at H few vest aterat or aeait at ate ae ware Bae eaPear wa eae ae Fwer a sara Pear star aThee1 wet ae 4.50 are BT (A PsPratfedt & ore var & wr at ole fear var am) at afar oe faruTt att sais ar set &, ae Vast Ges orsSF awehdt at aewt1 frethedt t ag fader Paar g fs saoae aera wetSTH wat Het at smart zs 1 aft seh araer F arat1958-59 TUT 1959-60 A Pauter agy a& Aree a at Paar watatUT 7S| Wet die TH oa 5.50 oPeat wTe ar BIT Ie ser &, ae va HBT are eteo oHae BY oPeanfol woTaTTa ug sfeeaty arate for meth & Paw afer erat a at area 4366 weaaH arate fava TiaaT [1980] 2 3Ho fio Go (c) It is true that initially on November 21, !955 the capital account ~ of the assessee was debited and the college account wa9 credited with the iF'8um of Rs. 10 lacs in the books of th'e assessee but making of these entri~ ~ in the assessee's books would not a1ter the character of the borrowing nor would the said borrowing be impressed with the character of business expendi-ture for admittedly, the assessee maintained only one common set of books .. in which were inoorporated entries pertaining to her capital, assets and income from all her difference sources. The borrowing was completely unrelated to the purpose of the business and was actually used for making charity. It is, therefore, clear that the interest that was paid on the sum of Rs. 5.5 lacs to the bank by the assessee for the three concerned years .vas rightly held to be not deductible either 11t1der section 10(2) (iii) or under section 10(2)(xv) of th'e Act. [756F·H, 757A] Commissioner of. Income Tax, Bombay City II v. Bombay Samachar Ltd., Bombay, 74 ITR 723; Commissioner of Income Tax, Bontbay City IV v. Kishinchand, 109 I.T.R. 569; distinguished; ( d) Both the Tribunal as well as the High Court were ri&ht in taking tho view that the certificate dated October 17, 1958 was of no avail to the as&essee inasmuch as it merely stated that the assessee had promised n: donation of Rs. 10 lacs on October 21, 1955, out of which RB. 5.5 lacs were deposited in the joint account maintained in the name of the assessee and the District Magistrate, Bulandshahr for the college and the remaining 'um of Rs. 4.5 lacs was left as a loan with the assessee and interest thereon at 6% per annum was to be finally deposited in the technical institute account. -(The Tribunal and the High Court were also right in taking two view. that "'beyond making entries in the books of account of the assessee there was no material on record· lo show that the assessee had actually made over a sum of Rs. 4.5 lacs to the college or that the college had accepted the said r donation with the result that the amount credited to the college account in her books represented her own funds and lay entirely within her power of disJl06ition and that being so, the interest credited by the ass.ssee on the said sum of Rs. 4.5 lacs and the accretion thereto continued to belong to the assessee, and, therefore she was not entitled to the deduction in respect of such interests, and [758C-0] ( e) If no trust in favour of the college in regard to the amount of RB. 4.5 lacs could be said to have come into existence either on October 21, 1955 or November 21, 1955 or on any other subsequent date during the rele-vant years, no deduction in respect of interest credited by the ass..,ee to the account of the college over the said sum can be allowed. [759A·B] Clvn. APPELLATE JURISDICTI0:-1 : Civil Appeal Nos. 1831-1833 Of 1972· Appeals by Special Leave from the Judgment and Order dated 22-9-1971 of the Allahabad High Court in LT. References Nos. 775/70 and 342/64. B S. C. Manchanda and Mrs. Urmila K;ipoor for the Appellant. V. S. Desai and Miss A. Subhashini for the Respondent. The Judgment of the Court was delivered by atatazr,1922 at ere 10(2) & wel areere ay HBT A TTa et ere 12(2) & vette fatrerat & ge ore HBT A ATT aTsat eax we ane H ares Hot ot fH eA 4.50 aie wTAY we1 Paste & eek Paege anita atermfaaffedate&weaw fen mra a arta aefH aTwae21aaa HaCaT, fers ut 1955 aie Al og THPAAT fm seanTT sae eprersy UbeHT ar dare 10 AT RIT Her Vary ase at AT01 qavaT, 1955 BY Care gat sa fen Se & ara Foy erateser at 7S ott ug fa ce argo wee Tg 5.50 Tie WT aTata at aefan wo & Proffedt aieseraaer @ Peer &dqee ert a 7 sree, 1956 HY oat Peet STAT AT ait PTAfou faetfadt aan & atacgrre Peer wer Ut HT EAT IT TTTat ate mIeare eyBT A Heth aT aT| Tel Teh 4.50WTSIU Ye Ts HT Mee Fae Ve Sta FT gre Fatt aey at aitgewiegehh erFHsat aefeatqaraTHATUEfader Paar wor or fa oe ae ute det he FT aay TSex e wey ve oft whe aeifae ge oe HT ae IST GT ATwiz a fen wee ard & are Poot marva HeldET OTrae Frat ate ater1 ae Patent & eT a aPeency & Way1958 chr WaTWY Tar Panty qo am ate attr aterncr + Uswad gu fa tw a ataegres S wr aH at aE 5.50 Tie UT ATAaia wt areare # yaterit A Pam sere wet Poet wet aT aieag Ufa sear 84 & fam sure ah Te aT HN ET THT ITAAfetaare aia at arinea eer 10(2) ae & fact atts ae ot fa stat 5.50 wre a arerget ae at Ube TS xPaar TUT atl Wet Ts 4.50 Ae BIT IL SAAT SIH BT NeT gSSt fa estfauter arae A ge to at, attr afew 7 Weafataditer Poot fa Paatfadtt carer ge ute ar ate AT WaTaay Paar wer ar ate og fas re ae a Farart aT a ae Featgarer Porarefter at are Ura atseen a daa far a ay afeatstaan Fart st eft aa ale sftceat rarer eratat we et oar see at ag oft at Praffet at aferce x ar aerTH aT ate Bes Tee eeaT are WY fee faet ere F Paw PoratTTBl, Tat ara HI va wT Hy Seifeahor arate F ore H FATPert vay earsr wt Taare cae Pear qar aT1 sat ate sftrett agaforstear at arr at we ate sah fateosfefatermeresereafear et ariafeat a ofaeentfor ae faut wer|4. Sa seq o< Pes aay Prete aay 1957-58,1958-59HIT 1959-60 F 5.50 ATE Bue ue Paw wy ava sie ay ack atart sifec, afer} ger rotary at arg fata ane a arareat four Toa ue Pen Prevfect@ cad rer 66(2) a se | germata a ada Par ale wae ue ater wae He Paar wor awferme ft of} ga sar cnt Pafatce ape faut fa sar 5.50 wre a.ararrgewy ax 1957-58 ve fad & wit art Pau 20,107 sie waa, Pratey H Aer a et af we i95s-59 ubarat @ (Pref- fatWat fH Ht dea at we Mt, aay va SreeWS rede aan25,407atefaay, era aur Prater1922 af eer ae 10(2)(3) 1959-60 serar & Pam eer 18,445 10(2) (15) era) at & afte faeet ATT apy ST went eff1ue Prea 1970 ay arene FaetarGRIT 775 UTtetdeh 4.50 are eae oe fea aU ae ay Hechtar yet ay Pore ararer aPeefeoyaey* 1958-59 aT 1959-60 Ffaq erat fae wat at, afer a tay at ure 66(1) # ateseq ovata at Pree Prot ate ge see at al See aay aTuaa & Pau PrP ace Pray fs eat arert & aeat car ofePerPoat aPretPedh arr var are afear eoihaarer aretey a RTT AH 4.50are eae at tte oe sur Prey vat care aie gan ge aafayraor Sfeafad att at” a sett & wr a wae feu om ar7atvgfade1964wrare aefreerwear342ay|SetETITF aE at ae arte22 Paar,1971# wp at fafaae at faeat ar Paveraxfeat11970 ch fader dear 775 a frefhadt ar ataat ae at PeageiPaahcar aratw tnt 10 ate eae voarere fae wre ay aTemat et, TuLZAPURKAR, J.-Tbe assessee, Smt. Indermani Jatia, widow of ·) c Seth Ganga Sagar Jatia of Khurja, carried on money-lending and other businesses and derived income from various sources such as investment in shares, properties and businesses. However, the capi-tal, assets and income in respect of different sources of income were incorporated in one common set of books. With a view to com-memorate the memory of her deceased husband, on October 21, 1955 D she promised a donation of Rs. 10 lacs for setting up an Engineering College at Khurja to be named "Seth Ganga Sagar Jatia Electrical Engineering Institute Khurja". She also promised a further sum of Rs. 1.5 lacs for the construction of a Femille Hospital at Khurja but this subsequent donation of Rs. 1.5 laC! was to include the total interest that was to accrue on E the sum of Rs. 10 lacs earlier donated to the college. In pursuance of the promise made on October 21, 1955 she actually made over a sum of Rs. 5.5 lacs by depositing the same in a joint account opened in the names of the District Magistr~te, Bulandshahr and Smt. Inder-mani Jatia for the college while the balance of Rs. 4.5 lacs was left • with the assessee and was treated as a debt to the Institution and interest thereon at 6% per annum with effect from October 21, 1955 )-was to be finally deposited in the Technical Institute account. These · , facts become clear from a certificate dated October 17, 1958, issued by the District Magistrate, Bulandshahr which was produced before the Appellate Tribunal. ' The aforesaid transaction came to be recorded in the books of the assessee as follows : At the beginning of the accounting year (Samvat year 2012-13-accounting period 13-11-1955 to 1-11-1956) relevant to the assessment year 1957-58 the capital account of the assessee showed a net credit balance of Rs. 23,80,753. Initially on D November 21, 1955, a sum of Rs. 10 lacs was debited to her capital account and corresponding credit was given to the account of the said Institute. At the close of the said accounting year (i.e. on 1-11-1956) after debiting the aforesaid sum of Rs. 10 lacs the capital account showed a net credit balance of Rs. 15 ,06,891. There-after, during the sam.e year of account the assessee actually paid only a sum of Rs. 5.5 lacs to the institution on January 7, 1956 from the overdraft account which she had with the Central Bank of India Ltd., Aligarh. At the beginning of the accounting year the amount outstanding in the overdraft was Rs. 2,76,965; further overdrafts were raised during the accounting year with the result that at the end of the year th6 liability of the assessee to the bank was Rs. 9,55,660; among the further debits to this account during the year was said sum of Rs. S.S lacs paid to the Engineering College on rJanuary 7, 1956. 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