9911796707
TMI Blog1987 (3) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... dual assessment of the assessee in accordance with the provisions of section 64(2) of the Income-tax Act, 1961 ? " The relevant assessment year is 1976-77. The assessee, Sri Nagalingam, is a partner of the firm, M/s. Pabbati Nagalingam, in which he holds 90% share and the remaining 10% is held by Smt. V. Jayalaxmi. A sum of Rs. 30,000 was debited to the personal account of Sri Nagalingam and he converted the same into an asset of the joint family consisting of himself, his wife and his minor son by means of a declaration dated June 19, 1975. The transfer was treated as a gift and assessed to gift-tax. The amount of Rs. 30,000 was invested in the partnership concern of M/s. Pabbati Nagalingam. The Income-tax Officer applied section 64(2)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is liable only to the extent of the interest the said sum of Rs. 30,000 had fetched. We are unable to agree with this contention. In the Supreme Court case, one Ajitmal Parekh was a partner of the firm, M/s. Ajitmal Kanhaiyalal, having 7 annas share therein. On July 1, 1954, he retired from the firm. Thereafter, he gifted to each of his four sons Rs. 75,000. Three of his sons were minors at that time. There was reconstitution of the firm with effect from July 2, 1954. The major son became a partner of the reconstituted firm and the three minor sons were admitted to the benefits of the partnership in the reconstituted firm. In the assessment year 1956-57, the Income-tax Officer held that the income arising to the minors by virtu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that a sum of Rs. 30,000 was debited to the personal account of Shri Nagalingam and Shri Nagalingam converted the same into joint family asset by means of declaration dated June 19, 1975. It is also not disputed that Shri Nagalingam invested this amount, after conversion into the joint family asset in the firm, viz., M/s. Pabbati Nagalingam, in which he along with Smt. V. Jayalaxmi figured as partners holding 90% and 10% shares, respectively." Section 64(2)(b) of the. Act specifically enjoins that the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family. The Explanation to sub-section (2) of section 64 says that the property includes any interest in property, m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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