9911796707
TMI Blog1983 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... f overriding title. The short background of facts pertaining to this claim is as follows. The assessee's father Shri J.K.K. Sundaraja was originally partner in certain firms in his capacity as karta of his HUF. Subsequently, there was a partition in respect of his share of interest in various firms, which has been recognised. As a result of such partition, the assessee became entitled to half the share of interest in respect of the share ostensibly standing in the name of the assessee's father in those firms. It is common ground that this point as to the assessee being entitled to half share of profit or loss in the various years of the assessee's father as a partner originally in his capacity as karta of the HUF and which was subsequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee's half share (--) 1,10,264 For the assessment year 1977-78 Rs. (1) Sundaram Spinning Mills (+) 14,332 (2) Kandasamy Spinning Mills (--) 3,25,932 (3) Kandasamy Weaving Factory (+) 15,799 Aggregate (--) 2,95,801 The assessee's half share (--) 1,47,900 A copy of the assessment order in the case of the assessee's father also shows this figure of loss at Rs. 1,47,900, belonging to the assessee by virtue of overriding title. We have set out the figures only to highlight the claims of the assessee and the correctness of the figures may be verified by the ITO if necessary. 2. As we have already stated the point as to whether half the share of profit or loss belongs to the assessee, being entitled to it by overriding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection, the learned counsel for the assessee referred to and relied on the following decisions : Murlidhar Himatsingka v. CIT [I 966] 62 ITR 323 (SC), CIT v. A. Dharma Reddy [1969] 73 ITR 751 (SC), CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 292 (SC) and CIT v. Rasiklal Balabhai [1979] 119 ITR 303 (Guj.). 4. The learned departmental representative, Mr. Martin David, contended in reply that under section 72(1) of the Income-tax Act, 1961 ('the Act') the loss carried forward shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year provided that the business for which the loss was originally continued to be carried on by him in the previous year re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern. This position of law is well settled by the decision of the Supreme Court in the case of CIT v. Ramniklal Kothari [1969] 74 ITR 57 where it is observed : ". . . Share in the profits of a partnership received by a partner is 'profits and gains of business' carried on by him and is on that account liable to be computed under section 10, and it is a matter of no moment that the total profits of the partnership were computed in the manner provided by section 10 of the Income-tax Act and allowances admissible to the partnership in the computation of the profits and gains were taken into account . . ." The next step in this line of reasoning to consider the dispute is the consideration of the effect of the partition in respect of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers of a Hindu joint family from dividing any asset . . . " It is not disputed that the share allocated to the karta originally was liable to be assessed in the hands of his HUF and not in individual capacity as income derived from business because, although the karta is nominally a partner in the firm and is in law partner so far as the relation of the partners under the Partnership law is concerned, the title to the income vested in the HUF by virtue of its overriding title. The effect of the partition, according to the decision of the Supreme Court, is that instead of the Hindu undivided family being entitled to the share of income, which was the case before the partition, the separated members became entitled to their respective shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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