Judgment:
1. On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for the opinion of this court :
'(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the cash credit of Rs. 10,000 in the name of Shri Phool Chand Jain and interest of Rs. 900 thereon ?
(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the interest of Rs. 5,851 disallowed by the Income-tax Officer as interest paid to partners ?'
The fact regarding question No. 1 is that the assessee has not shown the cash credit of Rs. 10,000 from Phool Chand Jain. His submissions were recorded. He has confirmed the loan advanced to the assessee. Phool Chand Jain has retired as Assistant Sales Tax Officer, His identity is not in dispute. The cash credit was disbelieved on the ground that Phool Chand could not establish the sale of ornaments to advance an amount of Rs. 10,000 to the assessee.
Whether Rs. 10,000 was advanced by Phool Chand to the assessee or not, is basically a question of fact and the Tribunal is the final fact finding body. The fact that Rs. 10,000 have been advanced by Phool Chand to the assessee, and the identity of the creditor is established. The cash creditor has confirmed the loan. In these facts and circumstances it cannot be said that the finding of the Tribunal is perverse.
The fact regarding the issue in the second question that the amount of Rs. 5,851 has been paid to Raj Roop Kirtichand Tak, the finding of the Tribunal is that Raj Roop Kirtichand Tak is not a partner and if the amount of deposit made with the firm though by the same person but in a different capacity, that cannot be treated as advance by the partner to the firm. If the partner has a different capacity and deposited the same amount with the firm in a different capacity that is other than the partner, then that interest payment to the person who is not a partner, that payment cannot be treated as payment of interest to the partner and that is not hit by the provisions of Section 40(b) of the Act.
In the result, the answer to the questions is in the affirmative, i.e., in favour of the assessee and against the Revenue. The reference be made accordingly.