9911796707
TMI Blog1981 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ,060 5,85,827 1,95,943 Krishnagopal Jhaver, Srigopal Jhaver, Harigopal Jhaver, 0-4-6 4,138 - - 1,95,943 Estate of Ramgopal Jhaver --------------------------------------------------------------------------------------------------------------- 1-0-0 5,567 16,34,707 14,97,112 6,96,683 --------------------------------------------------------------------------------------------------------------------------------------------------- From the table given above, it will be seen that Krishnagopal Jhaver, Srigopal Jhaver and Harigopal Jhaver, all of whom are minors, have between them shares in the partnership to the extent of Re. 0-4-6. The firm was in receipt of income under the head "other sources" and also " interest income " during the accounting year. The firm, however, sustained a loss in business and also incurred speculation loss. Under the terms of the partnership, the minors were only admitted to the benefits of the partnership which means and implies that they are not to be mulcted with any share in the losses incurred by the firm. It was pursuant to this provision in the partnership that allocation has been made by the Income-tax Officer of the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the firm has been determined under each head of income. " This provision insists that the share income of a partner to be dealt with as part of his individual assessment, is not a head of income in itself, but is really a share of the components of the total income of the firm in which the partner has a share. If, for instance, the firm has income under several heads such as, business, property income, securities and other sources, then the aliquot share of each partner in the firm's income will have to be reckoned in accordance with the share of that partner under the partnership instrument in each and every one of the heads of income. This would be true in cases where all the partners are adult partners. The same rule applies to the allocation of loss computed in the hands of the firm. The share of loss of each partner under each head must be separately allocated to each partner. In the present case, it is common ground that the minors, Krishnagopal Jhaver, Srigopal Jhaver and Harigopal Jhaver, who between themselves hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 67(2) of the Income-tax Act, 1961. Learned counsel for the assessee was not in a position to cite any authority for the system of allocation which the assessee-firm had advanced before the income-tax authorities and the Tribunal. He frankly conceded that a situation of this kind had not arisen before courts nor was there any decision on this point rendered by any court and reported so far. Having regard to the considerations aforesaid, we are satisfied that our answer to the question must be in the affirmative and against the assessee. The reference of the Tribunal also contains a second question for our opinion. It relates to a technicality of income-tax practice or procedure. The question is as follows: " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the appeal was filed by the firm against its assessment and the correctness of allocation of share income cannot be questioned in such an appeal ? " Before the Tribunal, objection was taken by the Income-tax Department to the effect that in an appeal against its own assessment, an assessee-firm cannot canvass the correctness of the Income-tax Officer's a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to learned counsel, it is difficult to conceive that there can be a comprehensive or general objection to the scheme of allocation made by the Income-tax Officer even in cases where the order of allocation hits one or some of the partners alone and cannot be made common cause of by the others. We do not accept this contention as well-founded. If what the Departmental counsel says is correct understanding of section 247 of the Act, then, the question of allocation or apportionment of the total income as between the partners will have to fall between two stools, as it were. For, where the allocation is questioned, it cannot be agitated in an appeal against the firm's assessment, nor can it be agitated in an appeal filed by any partner in his own personal assessment, if it appertains to a group of partners, but not all. We do not accept the thesis that each individual partner separately and distributively can only agitate an appeal in so far as the allocation is objectionable in his own personal assessment. There may be cases where as between the partners, inter se, an allocation made by the Income-tax Officer may not be correct or may not follow faithfully the terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
