2001 PLP 219 (PTD)

YAD RAM MEENA, J. ‑‑‑In this reference application, the Tribunal was directed to refer the following questions for the opinion of this Court: "(1) Whether, the finding of the Tribunal relating to the allowance of deduction of business expenditure of Rs.36,000 as and by way of payment of alleged rent is based on any relevant evidence or otherwise perverse? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the share loss of Rs.49,210 in the purchase and sale of share?" The assessee is an investment company. It derives income from interest and dividend. It is also engaged in purchase and sale of shares. Before the Assessing Officer, the assessee, inter alia, claimed deduction of Rs.36,000 being rent in respect of the premises at Flat No.84, at 6C, Middleton Street, Calcutta. The payment, was made to one Nitin Dhawan, who is stated to be one of the directors of the assessee‑company, up to February 16, 1981. Thereafter, he became an employee of the assessee? company. The company has hired the premises on rent from June 1, 1981, in terms .of a registered agreement to the effect that the assessee had given an advance of Rs.1,08,000 to the said Dhawan and that amount was to be adjusted against the rent, that is, Rs.36,000 per year. The Income‑tax Officer has disallowed the rent on the ground that he has deputed an inspector to enquire as to whether any sign board of the assessee‑company was there and whether the premises are being used by the assessee for its business purposes. The report of the inspector was adverse to the case made out by the assessee. Therefore, the claim of rent of Rs.36,000 paid each year was disallowed. In appeal, the Commissioner of Income‑tax (Appeals) has pointed out that the Income‑tax Officer is not familiar with the facts and practice prevailing in Calcutta and in Calcutta it is very common to take the premises on hire and giving it to its employee or director. Rent payable can be adjusted against the amount advanced to the landlord. Thus., he allowed the claim of the assessee and deleted the addition made by the Income‑tax Officer on this count. In appeal before the Tribunal, the Tribunal has pointed out that putting a sign board on the premises is not a material point. The material point is that the assessee‑company's staff was accommodated to work for the assessee‑company. The advance payment was made towards the rent to adjust the same towards future rent. The statement of the caretaker which was based for disallowance was recorded behind the back of the assessee. No opportunity was given to cross‑examine him and even the caretaker may not be aware of the full details regarding the occupation of the premises. Payment of rent by the assessee has not been denied. Whether any business is being carried on by the assessee‑company or it was taken for the purpose of residence of one of its employees or directors that is immaterial. In both the cases the premises has been taken on rent, that is, for the purpose of business. The Tribunal finally concurred with the facts found by the Commissioner of Income‑tax (Appeals). Thus, whether the premises were taken on rent for the purpose of business or not, the concurrent finding is that it was taken for the purpose of business. Therefore, the questions, raised on the finding of facts, findings cannot be said to be perverse on the materials discussed by the Commissioner of Income‑tax (Appeals) and the Tribunal. ???? The next question is with regard to allowance of loss of Rs.49,210 in purchase and sale of shares. The assessee-company's claim before the Income‑tax Officer is that the assessee‑company suffered loss to the tune of Rs.49,210 in share dealings. The Income‑tax Officer has disallowed the loss front share business on the ground that the record was inadequate which is maintained in respect of share dealings. The Income‑tax Officer mainly referred to the prevalent practice that there are bogus claims regarding share dealings. He placed reliance on the decision of McDowell & Co. Ltd. v. Commercial Tax Officer (1985) 154 ITR 148 (SC). In appeal the Commissioner of Income‑tax (Appeals) has also agreed with the action adopted by the Income‑tax Officer. According to the Commissioner of Income‑tax (Appeals) it appears that dealings in shares are bogus. He pointed out that the assessee has deliberately sold, 7,000 shares at a lower rate to incur the loss. In appeal before the Tribunal, the Tribunal on examination of the facts found that the findings arrived at by the Income‑tax Officer and the Commissioner of Income‑tax (Appeals) do not appear to be correct. The transactions effected are doubtless and it is apparent that a lot of evidence requires to be considered. The transactions were made through registered share brokers. The rates quoted of the said shares were found to be correct from pages 48 to 82 of the paper book. The transactions are also found place in the said quotations. When the share transaction was made through the registered broker of stock exchange, the quotations of shares were found correct as per the record of the stock exchange. Whether the assessee sold 7,000 or 70,000 shares does not make any difference. It is the assessee's concern how to run the business. The claim of loss should not be disallowed on conjectures and surmises such as that there is a practice in Calcutta to claim bogus loss in share dealings. The Tribunal being the final fact‑finding body had found the fact on the basis of the materials on record that the assessee has suffered the loss in share dealing to the tune of Rs.49,

210. These findings cannot be said to be perverse on the basis of the materials considered and discussed in the order of the Tribunal. In the result so far as the question relates as to whether the finding of the Tribunal is based on materials on record we answer it in the affirmative, that is, in favour of the assessee and against the Revenue. So far as the question raised as to whether the finding is perverse, we answer it in the negative, that is in favour of the assessee and against the Revenue. Similarly, we answer question No.2 relating to share loss of Rs.49,210 in the affirmative, that is, in favour of the assessee and against the Revenue. The application is disposed of. M.B.A./128/FC ????????? Order accordingly.