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TMI Blog1986 (6) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has also taken place on 14-8-1967 among the four members of the said HUF in respect of the one-third share of the said HUF in the said firm Banaras Silk Museum in the name of Shri Prem Das above to the effect that the said one-third share of the HUF is also partitioned among the four members in equal shares of one-fourth each with effect from 15-8-1967 onwards. The share of profit and loss falling in the name of Shri Prem Das above as one-third share in the said firm from 15-8-1967 onwards is agreed to be shared among the four members in equal shares and the same has ceased to be owned by the said HUF". The HUF's claim that there was a partial partition as evidenced by the memorandum of partition dated 14-8-1967 was accepted in appeal by the AAC. The AAC's order in that regard, according to the assessee's learned counsel, has been accepted by the department. The Tribunal in the case of Shri Prem Das, HUF for the assessment year 1968-69 held that the HUF ceased to be a partner in Banaras Silk Museum from 15-8-1967, i.e., subsequent to the assessment year 1968-69. On a reference made under section 256(1) of the Income-tax Act, 1961 ('the Act') against the Tribunal's order for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of Shri Prem Das, individual, under section 64(1) and (2). The AAC's order deleting the share income of the minors in the hands of Shri Prem Das was maintained by the Tribunal. We have been told that this order of the Tribunal has since become final which means that in the hands of Shri Prem Das, individual, one-fourth share of the income derived from the firm has been finally assessed for the assessment years 1969-70 to 1973-74. Subsequent to the aforesaid Tribunal's order the department has once again reopened the assessments for the assessment years 1970-71 and 1971-72 of Shri Prem Das on the ground that Shri Prem Das along with his wife and minor sons constituted an AOP for sharing the income from Banaras Silk Museum in which Shri Prem Das held one-third share. There was no compliance to the notice issued under section 148 of the Act in respect of these two years and, consequently, the ITO passed ex parte orders under section 144 of the Act by determining the income of Shri Prem Das in the status of an AOP at Rs. 1,71,660 for the assessment year 1970-71 and at Rs. 2,18, 380 for the assessment year 1971-72. The Commissioner (Appeals) annulled the aforesaid assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndramohan Sharma (No. 2) [1982] 138 ITR 699 wherein it has been held that by the mere fact of partition of the joint family, no AOP is brought into being. Our attention was drawn to the observation of their Lordships in the aforesaid case which reads as follows: "Indeed, if the effect of partition is that each member is separated in status and estate from another, unless there is some further act on the part of such members on the basis of which an inference is drawn that they have combined or joined in a common purpose, it would be difficult to hold that they formed themselves into an association of persons as contemplated by the Income-tax Act. The right to receive the stipulated share of profits from the partnership firm, where the erstwhile karta continued to be a partner, did not flow from any agreement between the parties to carry on any common venture, but that right flowed from the right of a separated member of a Hindu joint family as a result of partition...." It has been stated that the share income from the firm had been credited in the accounts of the respective co-owners in the books of the firm itself which implies that the income received on behalf of the divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The High Court in deciding the issue considered the Supreme Court decision in the case of G. Murugesan Bros. and at page 805 it was observed that "here the position is quite different. The two persons concerned purchased the land obviously with a view to embark upon a joint venture of constructing a cinema building. During the course of its construction they thought of letting it out instead of running a business in it. There was no specification of share in the investment between the two persons. Subsequently, also in the lease deeds there was no specification of share nor any indication of specification of share or of investment or expenditure. The aim initially was to embark upon a joint venture of constructing a building and running in it either a commercial business or letting it out. That aim continued. An intention of common management or use of the property is quite evident in the present case". In the case before us Shri Prem Das continued to be the partner in the firm by virtue of an agreement contained in the deed of partition and it is not in dispute that the profits received by the assessee Shri Prem Das were received for and on behalf of the members of the erstwh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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