9911796707
|
Home
Issues Involved:
1. Whether the 5 annas share in the income of Amrit Chemicals for the year January 1, 1955, to December 31, 1955, accrued to the assessee Hindu undivided family. 2. Whether the income from the 5 annas share could be charged in the hands of the assessee Hindu undivided family. Detailed Analysis: Issue 1: Accrual of Income to the Assessee Hindu Undivided Family The primary issue revolves around whether the 5 annas share in the income of Amrit Chemicals for the period from January 1, 1955, to December 31, 1955, accrued to the Hindu undivided family (HUF) of Ashokbhai Chimanbhai. The court examined the deed of partition dated November 12, 1955, which stated that Ashokbhai Chimanbhai, the individual, became the full owner of the 5 annas share in the partnership firm of Amrit Chemicals from the date of the deed. The word "henceforth" in the deed indicated that Ashokbhai did not own the share from January 1, 1955, but rather from the date of the partition deed. The court relied on the principles established in the Supreme Court case of Sassoon & Co. Ltd. v. Commissioner of Income-tax [1954] 26 ITR 27 (SC), which stated that income accrues when a debt comes into existence and the right to receive payment is established. The court found that the income from the partnership firm could not be said to have accrued to the HUF after January 1, 1955, as the accounts of the firm had not been made up from that date until the date of the partition deed. Issue 2: Charging Income in the Hands of the Assessee Hindu Undivided Family The court also addressed whether the income from the 5 annas share could be charged in the hands of the HUF. The Appellate Assistant Commissioner had initially held that only the proportionate income for the period from January 1, 1955, to November 12, 1955, should be included in the income of the HUF. The court, however, disagreed with this view, stating that the profits of the firm for the entire calendar year 1955 had to be ascertained before they could be subjected to tax. The court cited the Supreme Court case of Bhogilal Laherchand v. Commissioner of Income-tax [1955] 28 ITR 919 (SC), which held that income cannot accrue until there is a right to receive it. In this case, Ashokbhai Chimanbhai, as the karta of the HUF, had entered into the partnership, but the HUF as a unit did not become a partner. The court noted that under Hindu law, the other members of the family do not become partners in the business by virtue of the karta's partnership with outsiders. The court concluded that Ashokbhai Chimanbhai, the individual, remained a partner in the firm for the entire calendar year 1955, and the profits for that year could only be ascertained at the end of the calendar year. Therefore, the income from the 5 annas share did not accrue to the HUF and could not be charged in its hands. Conclusion The court answered the referred question in the negative, holding that no part of the profit for the calendar year 1955 accrued to the HUF of Ashokbhai Chimanbhai and, therefore, no part of it could be charged in the hands of the HUF. The Commissioner was directed to pay the costs of the reference to the assessee.
|
