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PETITIONER: COMISSIONER OF INCOME TAX, AMRITSAR

       Vs.

RESPONDENT: M/S.SHIV PRAKASH JANAK RAJ & CO.PVT. LTD. ETC.

DATE OF JUDGMENT:       30/09/1996

BENCH: B.P. JEEVAN REDDY, SUHAS C. SEN

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T      B.P.JEEVAN REDDY, J.      These appeals  are preferred by the Revenue against the judgment of  the Punjab and Haryana High Court answering the questions, referred  at the  instance of  the  assessee,  in favour of the assessee and against the Revenue. The question involved in  all these  appeals  are  common.  It  would  be sufficient if  we take  the case  of one  of the  assessees, M/s.Shiv Prakash  Janak Raj  & Co.(P)  Ltd. Four  assessment years are  relevant in  this case,  viz.,  Assessment  Years 1968-69, 69-70,  1970-71  and  1971-72.  The  two  questions referred under  Section 256(1)  of the  Income Tax Act, 1961 are:      "(i) Whether, on  the facts  and in      the circumstances  of the case, the      Tribunal was  right in holding that      the  interest  for  the  assessment      year 1971-72,  had already  accrued      to  the  assessee  on  October  31,      1970, under  the mercantile  system      of accountancy?      (ii) Whether, on  the facts  and in      the circumstances  of the case, the      Tribunal was  right in holding that      the subsequent   relinquishment  of      interest  by   a  resolution  dated      November 24,  1970, did  not affect      the tax  liability of  the assessee      on accrual basis?"      The partners  of a  firm, M/s.Shiv  Prakash Janak Raj & Co. [the  Firm], are  also the shareholders/directors of the assessee-company. The  assessee-company had  advanced a loan to the  firm. During  the accounting  year relevant  to  the Assessment Year  1966-67, it  charged interest  in a  sum of Rs.25,048/- on  the loan  so advanced.  Similarly,  for  the Assessment Year  1967-68, it  charged interest  in a  sum of Rs.25,843/-.  For   the  four  assessment  years  concerning herein, however,  the assessee  adopted a  different course. [The accounting  year adopted  by the  assessee was the year ending on 31st October 31] In respect of the Assessment Year

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1968-69 [year ending October 31, 1967], the assessee-company passed a resolution on October 9, 1967 [i.e., before the end of the accounting Year] deciding not to charge interest from the firm  in view of the difficult financial position of the firm. For  the next three assessment years, i.e., Assessment Years 1969-70, 1970-71 and 1971-72, similar resolutions were passed on February 26, 1969, March 16, 1970 and November 24, 1970 respectively. In other words, in the case of last three assessment years,  the resolution  deciding  not  to  charge interest on  the loan  advanced to the firm was passed after the expiry  of the  relevant accounting  year.  Indeed,  the resolution says  that the  firm had approached the assessee- company to  waive the  interest on  the loan for each of the said  years   and  that  on  such  representation  that  the directors of the assessee-company [who were also partners in the said firm] decided that no interest shall be charged for each of the said three assessment years.      In the assessment proceedings relating to the said four assessment years,  the Income Tax Officer took the view that inasmuch as  the loans  in  question  were  interest-bearing loans and  because the assessee-company had relinquished the interest without  any commercial  considerations and further because the  directors/ shareholders of the assessee-company were interested  in the  firm, it  was a  case of  collusion between them  to evade  the tax  liability. Accordingly,  he added an  amount towards interest calculating it at the rate of fifteen  percent per  annum.  On  appeal,  the  Appellate Assistant Commissioner found that inasmuch as the resolution to waive  the interest  was passed  after the  expiry of the accounting year and further because the assessee-company was following the  mercantile system of accounting, the interest must be  held to have already accrued to the assessee before it was  waived. He, however, reduced the rate of interest to nine percent.  With  that  modification,  he  dismissed  the appeals. The  assessee thereupon  filed a  further appeal to the Tribunal  but without  success.  The  Tribunal  observed that even  though no  entries were  made in the books of the assessee-company or  of the  firm with respect to receipt or payment of interest, that circumstance is of no relevance in view of the facts that the resolutions were passed after the expiry  of   the  accounting  year  that  the  assessee  was maintaining its  accounts on mercantile business and further that  the   relinquishment  of  interest  was  not  for  any commercial reasons.  On reference,  however, the  High Court took a  contrary view  purporting to  follow the decision of this Court  in Commissioner  of Income Tax West Bengal-II v. Birla Gwalior  (P) Limited  [(1973) 89  I.T.R.266]. The High Court held  that in view of the said decision, the principle of earlier  decision  of  this  Court  in  Morvi  Industries Limited v.  Commissioner of  Income Tax  (Central), Calcutta [(1971) 82 I.T.R.835] cannot be applied to this case.      In these  appeals, it is contended by Sri J.Ramamurthy, learned senior  advocate for  the appellant-Revenue, that in the facts  and circumstances  of the case, the view taken by the Tribunal  was the  correct one being consistent with the decisions of this Court and that the High Court was in error in holding  to the contrary. Sri G.C.Sharma, learned counsel for the  assessee, however,  sought to support the reasoning and conclusion of the High Court.      Before we  refer to  the decisions of this Court, it is necessary to  reiterate the basic facts of the case. For the previous two  assessment years,  viz., 1966-67  and 1967-68, the  assessee-company   did  charge  interest  on  the  loan advanced by  it to the firm which shows that the loan was an interest-bearing loan. The second circumstance to be noticed

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is that the resolution waiving interest was passed after the expiry of  the relevant accounting year in the case of three subsequent assessment years, viz., Assessment Years 1969-70, 1970-71 and  1971-72. Only  in the  case of  Assessment Year 1968-69, was  the resolution passed before the expiry of the accounting   year.   Thirdly,   the   assessee-company   was maintaining its  accounts on  mercantile basis.  Yet another circumstance to be noticed is that the Tribunal has found it as a  fact that the waiver was not based upon any commercial considerations. Of  course, no  entries  were  made  in  the accounts of  the assessee-company, or for that matter in the accounts of  the firm,  in respect  of four assessment years concerned herein, that any interest was received or paid. On these facts,  it has  to be  held that  in the case of three subsequent assessment years, the interest had accrued to the assessee notwithstanding  the fact  that no entries may have been made  in the  accounts of  the assessee to that effect. The waiver  of interest  after the  expiry of  the  relevant accounting year  only meant  that the assessee was giving up the money which had accrued to it; It cannot be said, in the circumstances, that  the interest  amount had not accrued to the ascessee.  Therefore, the  Tribunal was  right in taking the view  it did  in respect  of Assessment  Years 1969- 70, 1970-71 and 1971-72. In the case of Assessment Year 1968-69, however, the  resolution was passed before the expiry of the accounting year  and though  the finding  of the Tribunal is that the  said waiver  was not  actuated by  any  commercial considerations, yet  the learned counsel for the Revenue did not press  the Revenue’s case so far as this assessment year is concerned.      In Morvi Industries Limited, the relevant facts are the following: the  assessee which was the managing agent of its sursidiary  company,   maintained  its   accounts   on   the mercantile system.  It was  entitled to  receive  an  office allowance of  Rupees one thousand per month, a commission at 12 1/2  per cent  of the  net profits of the managed company and an  additional commission  of 1  1/2  per  cert  on  all purchases of  cotton and  sales of  cloth and  yarn. In  the accounting year  ended on December 31,1954, and December 31, 1955, the  managed-company suffered  losses and the assessee earned only commission on the sale of cloth and yarn for the two years.  The total amounts including the office allowance which the  assessee was entitled to receive were Rs.50.719/- and Rs.13,963/-  for the two years. Under clause 2(e) of the commission was  due to the assessee on December 31, 1954 and December  31,   1955  respectively   and  it   was   payable immediately after the annual accounts of the managed company had been  passed in  general meetings,  which were  held  on November  24,  1955  and  July  21,  1956  respectively.  By resolutions of  its board  of directors  dated April 4, 1955 and June  19, 1956  respectively [i.e., after the commission had become  due but before it had become payable in terms of clause 2(e)],  the assessee  relinquished its  commission on sales and  office because  the managed  had  been  suffering heavy losses  in the  past years. The Tribunal held that the relinquishment by  the assessee of its remuneration after it had become  due was  of no  effect.  It  also  rejected  the assessee’s claim  that amounts  relinquished were  allowable under section  10(2)(xv) of  the Income  Tax Act,  1922. The High Court  agreed with  the view  taken by the Tribunal. On appeal, this  Court agreed  with the  view taken by the High Court and  the Tribunal.  It held  that the  commission  had accrued to  the assessee  on December  31, 1954 and December 31, 1955  and the  fact that  the payment  was deferred till after the  accounts had  been passed  in the meetings of the

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managed company did not affect the accrual of the income. It was held  that since  the assessee  had chosen  to  give  up unilaterally the  amounts accrued to it, it could not escape the liability  to tax  on those grounds. Khanna,J., speaking for the  three-Judge Bench  made the  following observations which are apposite to the issue concerned herein:      "The  appellant-company  admittedly      was   maintaining    its   accounts      according to the mercantile system.      lt   is   well   known   that   the      mercantile  system   of  accounting      differs substantially from the cash      system of  book-keeping. Under  the      cash systems  it  is  only-  actual      cash  receipts   and  actual   cash      payments  that   are  recorded   as      credits and  debits; whereas  under      the   mercantile   system,   credit      entries  are  made  in  respect  of      amounts due immediately they become      legally due  and  before  they  are      actually received;  similarly,  the      expenditure items  for which  legal      liability has been incurred amounts      in question are actually disbursed.      Where   accounts    are   kept   on      mercantile basis,  the  profits  or      gains are  credited though trey are      not  actually   realised,  and  the      entries  thus   made  really   show      nothing more  than  an  accrual  or      arising of  the said profits at the      material  time.  The  same  is  the      position  with   regard  to  debits      made.  (See   Indermani  Jatia   y.      Commissioner of  Income-tax  [1959]      35   I.T.R.298;    [1959]   Suppl.1      S.C.R.45 (S.C.).....In  the present      case, the amounts of income for the      two years in question were given up      unilaterally after they had accrued      to the  appellant-company. As such,      the appellant  could not escape the      tax liability for those amounts."      The learned Judge also quoted with approval certain observations made  by Hidayatullah,J.  [as he  then was]  in Commissioner of  Income Tax  v.  Shoorji  Vallabhdas  &  Co. [(1962) 46  I.T.R 144],  which we  shall refer to presently. The ratio  of this  decision clearly  support the  Revenue’s case.      In Birla Gwalior (P) Ltd., the facts are the following: the  respondent,   which  was  the  managing  agent  of  two companies, maintained its accounts on the mercantile system. It was  entitled to an agreed managing agency commission and an office  allowance from  each of the managed companies. No date for  payment of  the commission  was stipulated  in the managing agency  agreements.  The  accounting  year  of  the respondent  as   well  as  the  managed  companies  was  the financial year.  The respondent  gave up the managing agency commission  from   both  the   managed  companies   for  the Assessment Years  1954-55 to  1956-57, after  the end of the relevant financial Years but before accounts were made up by the managed companies. It also gave up before the end of the relevant financial  Years its  office allowance  from one of the managed  companies for  the Assessment Years 1955-56 and

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1956-57. The  Appellate Tribunal  held that  the  commission given up was not the respondent’s real income and that since it was  given up op grounds of commercial expediency, it was an allowable deduction under Section 10(2)(xv) of the Indian Income Tax  Act, 1922.  In relation to office allowance, the Tribunal found  that the  financial position  of the managed company was  not sound  during the relevant accounting years that it  was necessary  for the  respondent to  give up  the office allowance  in order  to stabilise the finances of the managed company  and because  of the  sacrifice made  by the respondent the  finances of the managed company improved and as a  result the respondent was able to earn more profits in later years. On reference made under Section 66(2), the High Court  opined  that  (1)  the  commission  foregone  by  the respondent-assessee was not its real income. [On that basis, it declined  to answer  the question  whether the amounts of the  commission   foregone   were   allowable   as   revenue expenditure under Section 10{2)(xv) of the 1922 Act] and (2) that  the   office  allowance  foregone  was  deductible  as business expenditure  under Section  10(2)(xv).  On  appeal, this Court  affirmed the  view taken  by the  High Court. We are, however,  concerned only with the first answer given by the High Court. In our opinion, there is no contradiction or inconsistency between  the holding  in  this  case  and  the holding in  Morvi Industries  Limited.  In  this  case,  the important fact  found was  that the  money became due to the assessee not  at the  end of the accounting year, but on the date the  managed company  made up  its accounts. Indeed, no date  was   fixed  in  the  agreement  for  payment  of  the commission and  the assessee  gave up  its  commission  even before it  accrued to  it, i .e., before the managed company made up  its account. It is for this reason, this Court held that the  commission had  not accrued  to the assessee by or before the  date it  gave it  up. Indeed, Hegde,J., speaking for himself  and Khanna,J.,  specifically  referred  to  the decision in Morvi Industries Limited and distinguished it on the above basis. We are, therefore, unable to agree with the High Court  that by  virtue of the decision of this Court in Birla Gwalior  (P) Ltd.,  the principle  of Morvi Industries Limited does not apply to the present case. The facts of the present case  [with respect to three assessment years, viz., 1969-70, 1970-71  and 1971-72]  do squarely  fall within the principle of Morvi Industries Limited.      In State  Bank of  Travancore v. Commissioner of Income Tax, Kerala  [(1986) 158  I.T.R.102],  the  facts  were  the following: the appellant-Bank maintained its accounts on the basis of  mercantile system. It was charging interest on the loans advanced by it. Some of the loans had become "sticky", i.e., their  recovery had  become  extremely  doubtful.  The Bank,  however,   charged  interest  on  these  loans  also, debiting the  account of  the concerned parties. But instead of carrying  the interest  amount to  the  profit  and  loss account, the  appellant remitted the said interest amount to a separate  account called  "the Interest Suspense Account". In the  course of  its assessment,  the  Bank  claimed  that having regard  to the  poor financial  condition of the said debtors and  the poor  chances of  recovery of interest from them, the  interest amount  due from  them was  taken to the "Interest  Suspense   Account"  to  avoid  showing  inflated profits by  including hypothetical  and  unreal  income  and further that  the interest  on such  sticky advances was not its real  Income and,  hence, not taxable. Both the Tribunal and the High Court rejected the plea. On appeal, this Court, by majority,  Sabyasachi Mukharji  and Ranganath  Misra,JJ., [Tulzapurkar,J. dissenting]  affirmed the  decision  of  the

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High Court.  This Court  held that  the interest  on  sticky advances did  accrue to  the appellant-Bank according to the mercantile  system  of  accounting  and  that,  indeed,  the appellant had  debited the respective parties with interest. The appellant,  however, did  not chose to treat the debt as bad debts  but carried  the interest amount to the ’Interest Suspense Account".  Mere  crediting  of  the  said  interest amount to,  what it  called the "Interest Suspense Account", without treating it as a bad debt or irrecoverable interests was repugnant  to Section  36 (1)(vii)  and Section 32(3) of the Act  and that  the concept  af real income does not help the appellant-Bank. It was observed that the concept of real income cannot  he so  read as  to defeat  the object and the provisions  of  the  Act.  Sabyasachi  Mukharji,J.,  in  his opinion, discussed  all the  relevant cases  on the  subject including Morvi  Industries Limited  and Birla  Gwalior  (P) Ltd. as  well as  the derision  of  this  Court  in  Shoorji Vallabhdas  &   Co.  and  stated  the  proposition  emerging therefrom in the following words:      "(1) It is  the  income  which  has      really accrued  or  arisen  to  the      assessee that  is taxable.  Whether      the income  has really  accrued  or      arisen  to  the  assessee  must  be      Judged in  the light of the reality      of the  situation. 12)  The concept      of real  income would  apply  where      there  has   been  a  surrender  of      income which  in  theory  may  have      accrued but  in the  reality of the      situation, no  income had  resulted      because the  income did  not really      accrue. (3) Where a debt has become      bad, deduction  in compliance  with      the provisions  of the  Act  should      be claimed  and allowed.  (4) Where      the Act  applies,  the  concept  of      real income  should not  be so read      as to  defeat the provisions of the      Act. (5)  If there is any diversion      of  income   at  source  under  any      statute  or  by  overriding  title,      then there  is  no  income  to  the      assessee.      (6) The  conduct of  the parties in      treating the income in a particular      manner is  material evidence of the      fact whether  income has accrued or      not.  (7)   Mere  improbability  of      recovery, where  the conduct of the      assessee is  unequivocal, cannot be      treated as  evidence  of  the  fact      that income  has  not  resulted  or      accrued  to   the  assessee.  After      debiting the  debtor’s account  and      not  reversing  that  entry  -  but      taking  the   interest  merely   in      suspense  account  cannot  be  such      evidence  to   show  that  no  real      income has  accrued to the assessee      or been  treated  as  such  by  the      assessee. (8)  The concept  of real      income is  certainly applicable  in      judging   whether  there  has  been      income or  not but,  in every case,

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    it must  be applied  with care  and      within well-recognised limits."      To the argument of real income pressed with great  persistence in that case, the learned Judge responded in  the following words:      "We were  invited to  abandon legal      fundamentalism. With a problem like      the present  one, it  is better  to      adhere to the basic fundamentals of      the   law    with    clarity    and      consistency than to be carried away      by common  cliches. The  concept of      real income  certainly is  a  well-      accepted one and must be applied in      appropriate    cases    but    with      circumspection  and   must  not  Be      called  in   aid  to   defeat   the      fundamental principles  of the  law      of income-tax as developed."      We respectfully  agree with the propositions as well as the observations  of the  learned Judge  with respect to the plea of real income.      We may now deal with the decision in Shoorji Vallabhdas & Co.,  relied upon  strongly by Sri Sharma, learned counsel for  the  respondent-assessee.  The  assessee-firm  was  the managing agent of two shipping companies. Under the managing agency agreement,  the assessee  was entitled  to receive as commission ten percent of the freight charged. Between April 1, 1947  and December  31, 1947, a sum of Rs.1,71,885/- from one company  and Rs.2,56,815/- from the other company became due to  the assessee  as commission at the aforesaid rate of ten percent.  In the books of account of the assessee, these amounts were  credited to itself and debited to the managing companies. But  what happened  even before December 31, 1947 is of  relevance. In  November 1947, the assessee desired to have the  managing agency transferred to two private limited companies,  Shoorji   Vallabhdas  Limited   and   Pratapsinh Limited, floated  by the assessee-firm. Certain shareholders of the  managed companies objected to the rate of commission and suggested  that the  commission  should  be  either  ten percent of  the profits  of the  managed companies  or 2 1/2 percent of  the freight  receipt. The  board of directors of the  Malabar   Steamship  Company   agreed  with   the  said suggestion and  invited  the  assessee-firm  to  reduce  its managing commission to 2 1/2 percent of the freight for that year as  well as for the future years. The assessee accepted the said offer and agreed to voluntarily reduce its managing agency commission  both in  respect of  that year as well as for the  future years to 2 1/2 percent of the total freight. A similar  procedure was  followed in  the case of the other managed company  [New Dholera  Steamships Limited].  On this basis, both  the managed companies appointed the two private limited companies  aforesaid as  their  managing  agents  at their extraordinary  meeting held on December 30, 1947 - the appointment  was  to  take  effect  from  January  1,  1948. Subsequently, at  the annual general meetings cf the two man managed companies held in December, 1948, the commission was reduced from  ten percent of the freight to 2 1/2 percent as already agreed.  The assessee  accordingly gave  up  seventy five percent  of its  earnings during  the aforesaid year of account [April  1, 1947  to December  1, 1947] and disclosed only the  remaining twenty five percent amount as its income in its  assessment proceedings.  The Income  Tax Officer and the  Appellate   Assistant  Commissioner   held   that   the commission amount @ ten percent of the freight had already

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accrued to  the assessee  during the previous year ending on March 31,  1948 and  since the assessee had given up seventy five percent  of the  said amount  after such  accrual,  the whole of  the commission amount, which was actually credited in the  books of  the assessee, is includible in its income. On appeal, there was a difference of opinion between the two members of  the Tribunal.  On reference to the President, he held that  even though the actual reduction took place after the year of account was over, there was in fact an agreement to reduce  the commission  even during  the currency  of the accounting year and hence, it cannot be said that the larger income [@  ten percent]  had accrued  to the  assessee-firm. Accordingly,  the  assessee’s  appeal  was  allowed  by  the Tribunal.  Thereupon,   the  following  two  questions  were referred to the High Court under Section 66, viz.:      "(1) Whether  the   two   sums   of      Rs.1,36,903  and   Rs.2,00,625  are      income of the ’previous year’ ended      March 31,1948?      (2)  If the  answer  to  the  first      question  is  in  the  affirmative,      whether they  represent an  item of      expenditure permissible  under  the      provisions of  section 10(2)(xv) of      the Indian Income-tax Act, 1922, in      computing the  assessee’s income of      that  ’previous   year’  from   its      managing agency business?"      The High  Court agreed  with  the  view  taken  by  the President of the Tribunal and answered the first question in the negative,  i.e., in  favour of  the assessee and against the Revenue.  It declined  to express  any  opinion  on  the second question. This Court affirmed the approach adopted by the President of the Tribunal and the High Court. It pointed out:      "Here too,  the  agreements  within      the  previous   year  replaced  the      earlier agreements, and altered the      rate in  such a  way as to make the      income different from what had been      entered in  the books of account. A      mere book-keeping  entry cannot  be      income, unless  income has actually      resultad, and  in the present case,      by the  change  of  the  terms  the      income  which   accrued   and   was      received consisted  of  the  lesser      amounts and  not the  larger.  This      was not a gift by the assessee firm      to  the   managed  companies.   The      reduction  was   a  part   of   the      agreement  entered   into  by   the      assessee firm to secure a long-term      managing agency arrangement for the      two   companies    which   it   had      floated."      Hidayatullah,J., speaking  for himself and J.C.Shah,J., observed  that  the  facts  of  the  case  before  them  was identical to the facts of the case in Commissioner of Income Tax v.  Chamanlal Mangaldas  & Co.  [(1960) 39  I.T.R.8] and that the  principle of the said decision squarely applied to the facts  of the  case before  them. In  the course  of the judgment, thy learned Judge observed:      "Income-tax is a levy on income. No      doubt,  the  Income-tax  Act  takes

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    into account  two points of time at      which  the   liability  to  tax  is      attracted, viz., the accrual of the      income  or  its  receipt;  but  the      substance  of  the  matter  is  the      income. If  income does  not result      at all, there cannot be a tax, even      though in book-keeping, an entry is      made about a ’hypothetical income’,      which does  not materialise.  Where      income has,  in fact, been received      and is  subsequently  given  up  in      such circumstances  that it remains      the income  of the  recipient, even      though given  up, the  tax  may  be      payable. Where, however, the income      can be said not to have resulted at      all,  there  is  obviously  neither      accrual nor receipt of income, even      though  an  entry  to  that  effect      might,  in  certain  circumstances,      have been  made  in  the  books  of      account. This  is exactly  what has      happened  in   this  case,   as  it      happened   in   the   Bombay   case      [Commissioner  of   Income-tax   v.      Chamanlal Mangaldas & Co. (1956) 29      I.T.R.987),   which was approved by      this court."      We may  also mention  that when  this  case  was  cited before this Court in State Bank of Travancore, it has been distinguished  on the  basis of  the above  fact, viz., that the  agreement to  give up  seventy five percent of the commission was  arrived at during the relevant previous year itself, i.e.,  before the  close of  the  previous year and, therefore, what  accrued to  the assessee  at the end of the relevant previous  year was  the commission at 2 1/2 percent of the  freight alone  and not  @ ten  percent.  It  cannot, therefore, be  said that  this case  lays down any principle contrary to  the one enunciated in Morvi Industries Limited. Since the facts of the case in Chamanlal Mangaldas & Co. are identical to  the facts  in Shoorji  Vallabhdas & Co., we do not think  it necessary  to refer  to the facts of that case separately.      Sri G.C.Sharma  submitted that applying the real income theory, it  must be held that no interest had really accrued to or received by the assessee for the said three assessment years [1969-70,  1970-71 and  1971-72] and  that indeed,  no such entries were made in the account books of the assessee. He submitted  that, as  a fact,  no income  was received and that the assessee cannot be asked to pay tax on income which it had  not received. We answer this contention by repeating the words  of Sabyasachi  Mukharji,  J.  in  State  Bank  of Travancore, which we have extracted hereinabove. The concept of real  income cannot  be employed  so  as  to  defeat  the provisions of the Act and the Rules. Where the provisions of the Act  and the Rules apply and followed. There is no room- nor would  be permissible  for the  court -  to  import  the concept of  real income  so as  to whittle  down, qualify or defeat the provisions of the Act and the Rules.      For  the   above  reasons,   the  appeals  relating  to Assessment Years  1969-70, 1970-71  and 1971-72 [in the case of Shiv  Prakash Janak Raj & Co.] are allowed and the appeal relating to  Assessment Year  1968-69 [in  the case  of Shiv Prakash Janak  Raj &  Co.] is  dismissed as not pressed. For

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the  same  reasons,  the  other  appeals  are  allowed.  The judgment of the High Court in all these matters [except with respect to  the Assessment  Year 1968-69 in the case of Shiv Prakash Janak  Raj  &  Co.]  is  set  aside.  The  questions referred to  are answered  in  favour  of  the  Revenue  and against the  assessee [except  in  the  appeal  relating  to Assessment Year  1968-69 in  the case  of Shiv Prakash Janak Raj & Co.].      There shall be no order as to costs.