9911796707
TMI Blog1991 (10) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... business, as such, to some extent and also deeming it expedient at this stage of his life to divide these shares with his two sons " drafted up with his sons this instrument. A perusal of this instrument shows that he decided and gave away for good sum of Rs. 30,000 from each of the above firms from his capital standing invested in these concerns to his sons J.L. Puri and J.K. Puri, other two parties to this agreement. The instrument also records that a sub-partnership was constituted by these three persons, namely, father and two sons, under the name and style of M/s Sohan Lai Puri and Co. The business of this partnership was to be that of holding shares for other firms formed with outside parties through any of the parties signatories to this agreement and also carry on any other business, trade or commerce as may be mutually decided and agreed upon. to be started later. The profits and losses to the extent of 1/3rd from the firms of M/s Hari Palace and M/s Lakshmi Theatre which earlier fell to the lot of Shri Sohan Lai were to be shared by these three persons equally. 3. This instrument also recorded that Shri. Sohan Lai Puri having become representative of the other two par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere completed on this firm as a registered firm. 7. For the assessment year 1980-81, the assessee filed the return on 30th August, 1980 declaring income of Rs. 60,849. During the process of assessment, the Assessing Officer by means of a letter dated 14-1-1983 projected to the assessee the provisions contained in section 60 of the Income-tax Act, 1961 and asked him to show cause why income accruing and arising from the following three firms be not taken as entirely belonging to him individually, " as the assets from which you have derived your share of income from the above three firms, has not been transferred within the meaning of section 60 of the Income-tax Act, 1961":--- M/s Hari Palace, Jalandhar ; M/s Hari Royal Talkies, Jalandhar ; and M/s Laxmi Theatre, Yamunanagar. The action so proposed by the Assessing Officer was opposed by the assessee. The Assessing Officer considered the objections as in fact first recorded by him as a part of his assessment order, para 2.2, dated 17-3-1983 but held that in the case of M/s Hari Royal Talkies he was satisfied that the provisions of section 60 do not apply as apart from transfer of income but assets producing the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existence of and actual operation of the sub-partnership evidence by the instrument of first day of April, 1973 which provided an over-riding title to the income accruing and arising as share of profit to Shri Sohan Lai Puri from the firms of M/s Hari Palace and Lakshmi Theatre. The CIT (Appeals) held that diversion of income at source and voluntary undertaking of an obligation cannot create any over-riding title. According to him, the appellant was wholly and solely in full enjoyment of the entire share income from the said firms and there was no obligation upon him to transfer any part of such income to anybody else. According to him, in the absence of a legal obligation enforceable by law, over-riding title cannot come into being. It was merely an application of income. He relied upon certain authorities for these observations and these are mentioned in para 7 of his impugned order dated 18-11-1987 for the assessment year 1980-81. 10. For the subsequent three assessment years, he merely followed this judgment and insofar as this issue is concerned, dismissed the assessee's appeals. 11. Before us, insofar as the appeals of the assessee are concerned, it was argued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der a covenant of the partnership deed gives rise to that right, has arisen. He also submitted that in this view of the matter, the assessee was entitled to the profits accruing and arising to him as partner of the two concerns mentioned above and what happened thereafter was application of money so received by him. He relied on the following judgments to strengthen his arguments : (i) CIT v. Ashokbhai Chimanbhai [1965] 56 ITR 42 (SC), (ii) Sukhlal Sheo Narain v. CIT [1973] 89 ITR 157 (Punj. Har.), (iii) S.P. Jaiswal v. CIT [1981] 130 ITR 643 (Punj. Har.), (iv) Indian Glass Agency v. CIT [1982] 137 ITR 245 (Delhi), (v) CIT v. Dr. R.S. Gupta [1987] 165 ITR 36 (SC), and (vi) Moti Lal Chhadami Lal Jain v. CIT [1991] 190 ITR 1 (SC). 13. The learned Counsel for the assessee in the rejoinder submitted that the issue really is not open on merits for consideration because settled position on facts and in law taken up by the Revenue after due consideration cannot be changed by mere ipse dixit of an Officer. As to whether section 60 applies, he submitted that the controversy is concluded by the Supreme Court judgment in the case of Murlidhar Himatsingka v. CIT [1966] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Parashurtwn Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 that taxes are the price that we pay for civilisation. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. 16. The Hon'ble Court has further observed that it has to be home in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. 17. If we examine the case before us in the light of the law laid down by the apex Court of this land alongwith the law as explained by the Hon'ble jurisdictional High Court in the case of Dalmia Dadri Cement Ltd. we find that the action of the Revenue in reversing the decisions earlier taken is without any justification. When the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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