JUDGMENT

This is a reference u/s 66(2) of the Income Tax Act (XI of 1922). The assessee is a Hindu undivided family which does business in cloth, money-lending and property. For the assessment year 1938-39 the assessee returned an income of Rs. 9,128. The Income Tax Officer examined the books of account and added to the assessable income a sum of Rs. 2,814 from property and Rs. 8,919 from business. The last named sum included an amount Rs. 1,850 on account of interest which had been received from Kunjamal Banwari Lal and it is in respect of this sum of money that a reference has been made to us.

It appears that on November 29, 1927 the assessee advanced a loan of Rs. 15,000 on the security of house property, to Trilokinath Sansarnath, and on March 16, 1929 a further loan was advanced security of the same property for a sum of Rs. 5,000, which included Rs. 1,354 on account of January 30, 1932 the assessee instituted a suit and he ultimately obtained a decree for Rs. 32,000. Meanwhile another suit had been instituted for Rs. 58,000 by one Kanhaiya Lal and the suit was decreed, but for Rs. 2,000 only.

Trilokinath Sansarnath thereafter sold the mortgaged property to Bengalimal. Proprietor