9911796707
TMI Blog1993 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co., was not includible in the total income of the assessee?" The reference arises in the background of the following facts : The assessee is assessed in the status of "individual". He was a partner in a firm of Messrs. Ramniklal J. Kinariwala and Co., under a deed of partnership dated January 24, 1972. He had a share of 15 per cent. in the profits of the firm and a share of 19 per cent. in the losses. The accounts of the partnership firm were closed on December 31, 1972. In the meantime, by a deed of settlement dated December 22, 1972, the assessee created a trust known as "Prashant Jivanlal Trust" for the benefit of his sister-in-law, nephew and niece. By the said deed, the assessee settled in trust 40 per cent. of the right, title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated December 20, 1980, passed in Income-tax Appeal No. 2358/(Ahd.) of 1977-78. The Tribunal agreed that a question of law arises out of the said order and has, therefore, referred the abovequoted question for the opinion of this court. At the time of hearing of this matter, learned counsel for the assessee submitted that, oh identical facts, a similar question is answered by this court in favour of the assessee, who was also a partner of the firm of Messrs. Ramniklal Jivanlal Kinariwala Industries, in Income-tax Reference No. 191 of 1980 (Sunil J. Kinariwala v. CIT [1995] 211 ITR 127), decided on October 29, 1993. It is admitted by learned counsel for the Revenue that the facts in the present reference and the facts in Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Nandiniben [1983] 140 ITR 16 (Guj) and in the case of Murlidhar [1966] 62 ITR 323, decided by the Supreme Court, it is apparent that what has been diverted by the assessee in both the cases was the right to receive profits and to pay losses, and that the amounts standing in the capital account of the firm continued to belong to the assessees. The Supreme Court had not given any importance to the factor that capital is not transferred. The Supreme Court has observed that the right to receive profits and to contribute to losses constituted the income-producing apparatus or 'asset' and once that stood transferred by gift to the beneficiaries section 60 of the Income-tax Act cannot be invoked. In this case also, the same would be the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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