Delhi High Court
Commissioner Of Income-Tax vs G.K. Chadha on 31 January, 2001
Equivalent citations: 2001 252 ITR 617 Delhi
Author: A Pasayat
Bench: A Pasayat, D Jain
JUDGMENT
Arijit Pasayat, C.J.
1. Heard.
2. All these reference applications are interlinked in the sense that they relate to the same assessed and the dispute revolves round the allowability of interest to the Hindu undivided family (for short "the HUF"), of the assessed. The references have been made under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"). So far as the assessment years 1971-72, 1972-73 (I. T. R. Nos. 187-88 of 1981) and 1973-74 (I. T. R. No. 148 of 1981) are concerned, the Revenue is in reference against the Tribunal's decision that interest was allowable as expenditure both under Section 36(1)(iii) and Section 37 of the Act. So far as these references are con-
cerned, the Revenue's stand is that on the death of Shri B. N. Chadha, his son, i.e., the assessed, could not have constituted a Hindu undivided family. We find that there was no dispute by the Revenue before the Tribunal on the point that with effect from December 31, 1969, the capital account standing in the name of G. K. Chadha (HUF) was the property of his Hindu undivided family. The only ground on which allowance of interest was objected to was the absence of any specific agreement for paying such interest.
3. Though learned counsel for the Revenue submitted that on the death of Shri B. N. Chadha, his son could not have constituted a Hindu undivided family, that is not an acceptable stand because on or before December 31, 1969, an individual could impress his individual property with the characteristic of a Hindu undivided family by the act of blending. As is fairly well settled, no specific or particular mode of blending is provided for in the statute. That being the situation, we find no substance in the plea of learned counsel for the Revenue that there was no existence of any Hindu undivided family and, therefore, the question of paying any interest did not arise. So far as the absence of any agreement is concerned, the Tribunal has referred to various factual aspects to conclude that even in the absence of such a specific agreement or contract, demand/payment of interest by the concerned parties could be provided for. These conclusions are factual in nature giving rise to no question of law. Accordingly, we decline to answer the questions which have been referred at the instance of the Revenue. So far as the assessment year 1974-75 (I. T. R. No. 305 of 1981) is concerned, the Revenue had also sought for reference on identical question of allowability of interest. In view of our conclusions for the earlier three years, the question referred is not answered. So far as the assessed's reference (I. T. R. No. 304 of 1981) is concerned it relates to the rate of interest. What would be the appropriate rate of interest is essentially a factual aspect giving rise to no question of law. We, therefore, decline to answer the question which has been referred at the instance of the asses-see.
4. All the reference applications are accordingly disposed of.
