1987 (7) TMI 61 - HC - Income Tax

Summary

Issues:
- Interpretation of the Income-tax Act, 1961 regarding the assessment of share income post partial partition.
- Dispute over the assessment status of the assessee as an individual or Hindu undivided family.
- Application of the principles of law from the case of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367.

Analysis:
The judgment by the High Court of Allahabad involved applications filed by the Commissioner of Income-tax, Agra, under section 256(2) of the Income-tax Act, 1961, regarding common questions arising from a consolidated order by the Income-tax Appellate Tribunal for the assessment years 1978-79 to 1981-82. The case revolved around a partial partition in the family of the assessee on December 31, 1976, where share capital in a firm was partitioned among the assessee, his wife, and two minor sons. The Income-tax Officer assessed the assessee as an individual post-partition, accepting the factum of partition and the changed status. However, a dispute arose regarding the assessment of share income from the firm, with the Income-tax Officer contending that the share income was liable to be assessed in the hands of the assessee due to the absence of overriding title post partition.

The Appellate Assistant Commissioner of Income-tax ruled in favor of the assessee, leading to appeals by the Income-tax Officer before the Income-tax Appellate Tribunal. The Tribunal, considering the facts and applying legal principles from the case of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367, dismissed the appeals. Subsequently, the Commissioner of Income-tax filed applications under section 256(1) of the Act, which were also dismissed by the Tribunal. The High Court, after hearing the arguments, noted that the Tribunal found the partial partition and finance agreement genuine, with the share income never reaching the assessee individually post-partition. The Tribunal concluded that the share income was divided among the family members, and there was no evidence to the contrary.

Upon reviewing the Tribunal's order, the High Court affirmed that the principles of law from the case of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 were correctly applied. Consequently, the High Court found no statable question of law warranting referral. As a result, the applications by the Commissioner of Income-tax were summarily dismissed by the High Court of Allahabad.