S.l.p. (Civil) v. P.s.t.s. Thiraviarathna Nadar

THE HON'BLE SRI JUSTICE B.PRAKASH RAO And THE HON'BLE SRI JUSTICE R.KANTHA RAO R.C.NO.73 OF 1996 ORDER:(Per the Hon’ble Sri Justice B.Prakash Rao) This reference is under Section 256 (1) of the Income Tax Act,1961 {“the Act” for brevity}, at the instance of the Revenue. Thequestions of law arise as to whether (1) on the facts and in thecircumstances of the case, the ITAT was correct in law in holding thatthe documents on the basis of which the assessee had borrowedmoneys could not be considered as hundis and (2) on the facts and inthe circumstances of the case, the ITAT was correct in law in holdingthat the transactions of loans to the extent of Rs.2,21,900/- made by theassessee in cash are not hit by the provisions of Sec.69D of the Act. Heard Sri S.R. Ashok, learned Standing Counsel for theRevenue and Sri C.V.Narasimham, learned counsel for the assessee. Briefly stated, the facts of the case are that the assessee is aprivate limited Company and for the assessment year 1981-82, thequestion arose as to the fact that the assessee borrowed hundis’money to a tune of Rs.2,21,900/- and on certain distinguished factors,the Department did not accept the fee of the assessee and that it fallsunder Section 69D of the Act, especially in view of the fact that thehundis are in English. Learned counsel appearing for the assessee submits that underthe very same question, the Supreme Court negatived the saidobjection on the part of the Revenue as reported on 05.11.1990 in S.L.P. (Civil) No.13002 of 1985 between the Commissioner ofIncome Tax v. P.S.T.S. Thiraviarathna Nadar. Similarly, on the very same question, it has been held in favourof the assessee CIT v. Dexan Pharmaceuticals Pvt. Ltd.,[[1]]and CIT v. Yamuna Digital Electronics (P) Ltd., (A.P.)[[2]]. In view of suchconsistent opinion on the principle and especially in view of therejection of similar such objection by the Apex Court, we do not findany merit in the objection raised by the Revenue. The reference is, accordingly, answered in negative. _________________ (B.PRAKASH RAO, J) ________________ (R.KANTHA RAO, J) 25[th] February 2010 RRB [1](1995) 214 ITR 576 (AP)[2]238 ITR 717