COMMISSIONER OF INCOME-TAX vs. PARMANAND M SHAH

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ITR/178/1988HC GujaratGJHC24013254198811 December 2001Author: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages

AI SummaryAllowed

What did the High Court hold?

The High Court reframed the question referred by the ITAT to clarify that the assessee was a partner in the firm as the Karta of his HUF, while his wife was an individual partner. The revenue's counsel conceded that the issue was settled by the Supreme Court in C.I.T. vs. Harbhajan Lal and C.I.T. vs. Shri Om Prakash & Others. The Court found that since the individual assessee was not a partner in the firm, the ratio of the Apex Court decisions squarely applied. Therefore, the Tribunal was correct in directing the ITO to delete the wife's share income from the firm added under Section 64(1) of the Act. The reframed question was answered in the affirmative, in favour of the assessee and against the revenue. The reference stood disposed of accordingly.

What were the facts?

The Commissioner of Income-tax (CIT) filed an Income Tax Reference before the High Court of Gujarat at Ahmedabad, challenging an order of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'A'. The ITAT had directed the Income-tax Officer (ITO) to delete the income of the assessee's wife from the firm M/s. Sonal Textile Company, which had been added under Section 64(1) of the Income Tax Act, 1961. The dispute arose because the assessee's wife was a partner in the firm, and the assessee himself was also a partner, but as the Karta of his Hindu Undivided Family (HUF). The revenue contested the deletion of the wife's share income.

What were the issues?

1. Whether the Appellate Tribunal is right in directing the Income-tax Officer to delete the income of the assessee's wife's share in the firm of M/s. Sonal Textile Company, added under Section 64(1) of the Income-tax Act, in which her husband is also a partner? (Framed by the ITAT). Reframed Question: Whether the Appellate Tribunal is right in directing the Income-tax Officer to delete the income of the assessee's wife's share in the firm of M/s. Sonal Textile Company, added under Section 64(1) of the Income-tax Act, in which her husband as Karta of HUF is also a partner? (Framed by the High Court). Assessee's Contention: Not recorded, but the ITAT's decision was in favour of the assessee. Revenue's Contention: The revenue, through its counsel, fairly conceded that the controversy was concluded in favour of the assessee by the Apex Court decisions in C.I.T. vs. Harbhajan Lal, 204 I.T.R. 361 and C.I.T. vs. Shri Om Prakash & Others, 217 I.T.R. 785.

Which sections of the Income-tax Act were involved?

Section 64(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 178 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus PARMANAND M SHAH -------------------------------------------------------------- Appearance: MR AKIL QURESHI FOR MR MANISH R BHATT for Applicant. NOTICE SERVED for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE B.C.PATEL and MR.JUSTICE D.A.MEHTA

Date of decision: 11/12/2001

ORAL JUDGEMENT (Per : MR.JUSTICE D.A.MEHTA)

1 The Income Tax Appellate Tribunal, Ahmedabad Bench 'A' has referred the following question at the instance of the Commissioner, under the Income Tax Act,1961 (hereinafter referred to as 'the Act') :

"Whether, the Appellate Tribunal is right in directing the Income-tax Officer to delete the income of his wife share in the firm of M/s.Sonal Textile Company added under section 64(1) of the Income-tax Act, in which her husband is also a partner ?"

2 However, in view of the fact that the question referred, does not bring out the correct controversy, it is required to be reframed and we reframe the same in the following terms :

3 At the time of hearing, Mr.Akil Qureshi, learned Standing Counsel appeared on behalf of applicant-revenue. Om Prakash & Others, 217 I.T.R.785. 4 In the firm of M/s.Sonal Textile Company, the assessee Individual's wife is a partner along with the HUF of which assessee is a karta. In view of the fact that Individual is not a partner in the partnership firm the ratio of the aforesaid decisions of the Apex Court squarely applies and we do not find any reason to take a different view from the one taken by the Tribunal.

5 The Tribunal was therefore right in law in directing the I.T.O. to delete the income of the wife i.e. share income from the firm of M/s. Sonal Textile Company added under section 64(1) of the Act in which the husband as Karta of HUF was also a partner. The question as reframed is, therefore, answered in the affirmative i.e. in favour of the assessee and against the revenue.

6 The reference stands disposed of accordingly. There shall be no order as to costs. (B.C.Patel,J) (D.A.Mehta,J)

m.m.bhatt

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