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Issues involved: Appeal u/s 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the block assessment year 01.04.1995 to 07.06.2001.
Issue 1: Tribunal's decision on family arrangement and division of property. The Tribunal considered the family arrangement dated 1-6-2001 and absence of evidence of property division. The Appellant argued that the HUF continued to exist and should be taxed. The Respondent contended that the HUF was disrupted before the survey, and provided evidence of the family arrangement and mutation application. The Court held in favor of the Respondent, noting that the family arrangement need not be registered, citing relevant case law. Issue 2: Treatment of bad debts and tax liability. The Assessing Officer disallowed bad debts deduction due to lack of proof of irrevocability. The Appellant argued that the debts were written off and compliance with Section 36(i)(iv) was sufficient. The Respondent highlighted the losses incurred by the assessee and the disruption of the HUF. The Court found the Assessing Officer's approach contrary to law and upheld the Tribunal's decision. The disrupted HUF cannot be taxed, and the appeal was dismissed. This judgment addresses the issues of family arrangement and bad debts deduction in the context of income tax assessment, emphasizing compliance with relevant legal provisions and the disruption of the Hindu Undivided Family (HUF) in determining tax liability.
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