2002 (8) TMI 10 - HC - Income Tax

Assessee as a trustee of Rangraj Keshrimal Family Trust was a partner in a partnership firm named M/s. Darshan Traders.- Whether Tribunal is right in law in holding that the income earned from the firm belonged to Trust and thereby deleting the said income from the income of the assessee? - when the assessee was representing Trust in a partnership firm and when income allocated to the assessee as a partner had in fact been assessed in the hands of the beneficiaries it could not have been said to be the income of the assessee. AO was not right in holding that the share of income received by the assessee from firm was income of the assessee especially when M/s. Darshan Traders was a firm duly registered and the said firm had also been assessed. It is also pertinent to note that there was no dispute with regard to the genuineness of the firm and the trust Thus Tribunal was right in deleting the income which was allocated to the assessee as trustee of the Trust Question answered in positive

Summary

The High Court of Gujarat ruled in favor of the assessee, stating that the income earned from the partnership firm belonged to Rangraj Keshrimal Family Trust and not the assessee personally. The Tribunal was correct in deleting the income allocated to the assessee as a partner, as it had been assessed in the hands of the beneficiaries. The court found that the Assessing Officer was wrong in considering the income as that of the assessee. The reference was answered in favor of the assessee, and no costs were awarded.