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TMI Blog1992 (3) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... no capital had been contributed by him either from individual sources or from HUF sources and that the share income was allotted to him because he had agreed to contribute his time and labour for earning share income from the firm. (iv) till the date of assessment order for the assessment year 1982-83, i.e., 23-2-1985 the assessee had a wife and two daughters but did not have any son in his family. 3. In this back-ground while the assessee had filed his returns in the capacity of an Individual regarding his income from salary and dividend from M/s Rajasthan Patrika (P.) Ltd., he had filed another return for the assessment year 1980-81 in which also the status was shown as Individual although the verification was done in the status of an HUF. The source of income in that return was share from M/s Marketing Sales Associates. The ITO, Special Survey Circle before whom that return was filed, took the view that the share from that firm was assessee's income in his Individual capacity. This order was confirmed by the AAC but when the matter went to the tribunal, the tribunal restored it to the file of the AAC to give a specific finding on the following points : (i) Whether right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to be the income of an HUF in whose common stock the individual Shri Milap Kothari had thrown is self-acquired property. She pointed out that notwithstanding the fact that it was mentioned in the partnership deed that he represented his HUF in the firm, the fact was that Shri Milap Kothari was earning the share of income on account of his contribution of labour and skill and this had to be treated as his individual income. She pointed out that no investment had been made in the firm from the HUF funds. Finally she held that even if all the contentions of the assessee were accepted, the case would still fall within the provisions of section 64(2) of the IT Act and, therefore, the share income from the firm shall still be assessed in the hands of the individual. For the subsequent two assessment years, namely, assessment years 1983-84 and 1984-85 the Assessing Officer took the same stand in spite of the fact that meanwhile the decision of the AAC dated 22-3-1985 had been given for the assessment year 1980-81 in which it had been held that the share income from the firm had to be assessed in the status of HUF. 5. When the assessee went in appeal to the CIT(Appeals), he took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into by Milap Kothari as representing the HUF amounted to putting the assets of HUF to detriment. He argued that the Department had not doubted the genuineness of the firm and that is why registration had been granted to the firm. The learned counsel also argued that even if it were to be assumed that the assessee had thrown the assets of the individual in the common stock of the HUF, that was done in the assessment year 1979-80 and not in the assessment year 1982-83 and subsequent years and hence in this year it could not be said that the status of the assessee would change. 7. For the assessment year 1982-83, the assessee has raised one more objection and that is regarding an amount of Rs. 2,100. The IAC (Asst.) found that this amount had been received by the assessee and was kept in suspense account. The assessee explained it to be salary income pertaining to assessment year 1981-82 although assessee had received this amount on 30-6-1981. Since the assessee could not explain or prove that this amount had been assessed as assessee's salary income for the assessment year 1981-82, this was added to the income of the assessee for the asst. year 1982-83. 8. The learned Sr. D/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he character of coparcenary property but then in our opinion there has to be some property in respect of which the individual Shri Milap Kothari abandoned his rights in favour of the HUF namely "Milap Kothari, HUF" of which he claims he was the Karta. We may agree that the right of Shri Milap Kothari to share the profits of M/s Marketing Sales Associates may be deemed to be a property which he abandoned in favour of the HUF by virtue of which he became a partner in the firm representing his HUF. We may clarify that we are agreeing to these propositions on the basis of the submissions of the learned counsel for the assessee only for the sake of arguments and not necessarily because we believe them to be correct propositions of law. Therefore, even if we accept all the propositions of the learned counsel for the assessee the situation which emerges is that Shri Milap Kothari impressed his self-acquired property, namely, his skill and labour, with the character of HUF property. We may repeat, it is again a doubtful proposition whether assessee could have done this in view of the specific provisions of the Hindu Gains of Learning Act, 1930, to which we had drawn the attention of lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee has taken the stand that the assessee had not thrown any property into the family hotch-pot but it had been argued before the Tribunal, extracts of whose order have been quoted in the order of the CIT(A) for the assessment year 1982-83 so also by the IAC (Asst.) in the assessment order for the assessment year 1983-84, that "the right to receive share constitutes property which could be thrown into common hotchpot and, therefore, the share income from the firm should have been assessed in the status of HUF". However, before us it had been argued that Shri Milip Kothari had not contributed anything either as an individual or representing HUF and hence the provisions of section 64(2) would not apply. It has also been argued before us that even if the assessee had thrown any property into the common stock it was in the year 1979-80 and not in the assessment year 1982-83 and that the provisions of section 64(2) required that it should be some tangible property which should be thrown into the HUF common stock and not merely intangible asset like skill and labour. If this stand of the 1d. counsel is accepted, then the condition required for becoming a partner in the firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order quoting the submissions of the assessee before the Tribunal, that it was by throwing his selfacquired property into common hotchpot of the HUF and in that case the provisions of section 64(2) would clearly apply. In case it is accepted that there was no common stock of the HUF into which any property was thrown by the assessee despite what was argued before the Tribunal for the assessment year 1980-81, it would still remain a case where he has impressed his individual property in the shape of his right to share the profits in the firm acquired by him by virtue of his individual skill and labour, with the character of HUF income and in that case also the provisions of section 64(2) would be applicable. Thus viewed from any angle and by applying any criterion or any argument advanced by the 1d. counsel for the assessee, the final conclusion is only one and that is that the income from the firm M/s Marketing Sales Associates has to be assessed in the hands of the assessee as individual income. 11. Regarding the amount of Rs. 2,100 for the assessment year 1982-83, since no evidence has been brought on record to establish that this was part of Shri Milap Kothari's salary ..... 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