1975 (12) TMI 87 - AT - Income Tax

Summary

Issues:
1. Status of the assessee for the asst. yrs. 1962-63 to 1967-68.
2. Recognition of partial partition of the business.
3. Registration of the firm under section 185 of the IT Act, 1961.

Analysis:
1. The primary issue in this judgment revolves around the status of the assessee for the assessment years 1962-63 to 1967-68. Initially, the assessee claimed the status of Hindu Undivided Family (HUF) but later specific grounds were given up. The contention was that the assessee converted his self-acquired property into joint family property by declaring his intention to do so. The High Court directed the Tribunal to ascertain if there was enough evidence to support this claim. The Tribunal found that the verified declarations in the IT Returns over the years indicated the unequivocal intention of the assessee to convert his self-acquired property into joint family property. Relying on previous court decisions, the Tribunal concluded that the status of the assessee should be considered as HUF, contrary to the Department's assessment as an individual.

2. Another issue addressed in the judgment pertains to the recognition of partial partition of the business styled Autoways (India) with effect from the assessment year 1965-66. The claim for partial partition was initially rejected by the Income Tax Officer (ITO) and subsequently by the Appellate Authority Commissioner (AAC) based on the incorrect assessment of the assessee's status as an individual. However, following the determination of the correct status as HUF, the Tribunal directed the recognition of the partial partition under section 171 of the IT Act, 1961.

3. The final issue discussed in the judgment involves the registration of the firm Autoways (India) under section 185 of the IT Act, 1961, for the assessment years 1965-66 and 1966-67. The ITO had rejected the claim for registration based on the incorrect premise that the business belonged to the individual property of the assessee. The AAC upheld this decision. However, with the clarification of the correct status as HUF and the valid partition of the business, the Tribunal directed the grant of registration for the firm for the relevant years.

In conclusion, the Tribunal allowed the first six appeals partially and fully allowed the latter three appeals based on the corrected assessment of the assessee's status as HUF, leading to the recognition of partial partition and registration of the firm under the IT Act.