COMMISSIONER OF INCOME-TAX vs. MOHMADHUSSAIN JAMALBHAI

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ITR/30/1992HC GujaratGJHC24015381199216 October 2001Bench: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court declined to answer the questions referred to it by the revenue in both Income Tax Reference No. 30 of 1992 and Income Tax Reference No. 17 of 1993. The Court observed that the facts in these references were not clear. Consequently, the references were disposed of without any order as to costs. The Court did not make any findings on the merits of the issues raised by the revenue, nor did it provide any reasoning for a decision on the substantive questions of law or fact. The operative direction was to dispose of the references.

What were the facts?

The assessee, Mohmadhussain Jamalbhai, settled a trust known as Lokhandwala Family Trust. This trust became a partner in a partnership firm, and the assessee claimed that the share income from this firm belonged to the trust. The Assessing Officer disagreed, including the share income in the assessee's total income. The Commissioner of Income-tax (Appeals) deleted this inclusion, relying on a prior Tribunal decision for the same assessee. The Tribunal confirmed the CIT(A)'s order. The revenue has filed references challenging these decisions for assessment years 1978-79, 1979-80, 1981-82, and 1980-81. The High Court noted that the facts were not clear in these references.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in cancelling the order made by the Commissioner of Income-tax under section 263 of the Income-tax Act? The revenue contended that the Tribunal erred in cancelling the CIT's order. The assessee argued that the Tribunal's decision was correct. 2. Whether the Appellate Tribunal was right in law and on facts in holding that the income of the trust, in which the assessee was a trustee, is to be taxed in the hands of the trust on a substantive basis and excluded from the income of the assessee? The revenue questioned the Tribunal's view that trust income should be taxed substantively in the trust's hands and excluded from the assessee's income. The assessee supported the Tribunal's finding. 3. Whether the Appellate Tribunal was right in law in holding that income of Rs.92,875/- being share from a partnership firm belonged to Lokhandwala Family Trust and could not be included in the total income of the assessee for assessment year 1980-81? The revenue challenged the Tribunal's conclusion that the partnership share income belonged to the trust and not the assessee. The assessee maintained that the income rightly belonged to the trust.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 30 of 1992

with

INCOME TAX REFERENCE No 17 of 1993

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

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?

5.

Whether it is to be circulated to the Civil Judge? : NO

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus MOHMADHUSSAIN JAMALBHAI -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 30 of 1992 MR AKIL KURESHI with MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1

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

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA

Date of decision: 16/10/2001

COMMON ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) In ITR No.30 of 1992 at the instance of the revenue, the following questions have been referred for our opinion in respect of assessment years 1978-79, 1979-80 and 1981-82:-

(i) Whether the Appellate Tribunal is right in law and on facts in cancelling the order made by the Commissioner of Income-tax under section 263 of the Income-tax Act ?

(ii) Whether, the Appellate Tribunal is right in law and on facts in holding that the income of the trust in which the assessee was a trustee, is to be taxed in the hands of the trust on a substantive basis and to be excluded from the income of the assessee ?

2.

In ITR No.17 of 1993, at the instance of the revenue, the following question has been referred for our opinion in respect of the same assessee for assessment year 1980-81:-

"Whether, the Appellate Tribunal has been right in law holding that income of Rs.92,875/- being share from partnership firm belonged to Lokhandwala Family Trust and it cannot be included in the total income of the assessee ?"

3.

We have heard Mr Akil Kureshi learned counsel for the revenue and Mr RK Patel learned counsel for the respondent-assessee.

4.

The assessee is an individual who had settled a trust styled as Lokhandwala Family Trust. The said trust became a partner in a partnership firm. The assessee claimed that the share income belonged to the trust. The Assessing Officer, however, rejected the said contention and included in the hands of the assessee the said share income from the partnership firm. The Commissioner of Income-tax (Appeals) deleted the inclusion of share income in in the hands of the assessee in view of the decision of the Tribunal in the case of the same assessee for an earlier year. The Tribunal confirmed the order of the CIT (Appeals). Hence, these references at the instance of the revenue.

5.

At the instance of the revenue, the references were also made to this Court on the view taken by the

Tribunal requiring the Assessing Officer to make assessment in the hands of the trust on substantive basis.

6.

In those references, we have declined to answer the questions raised in those references in view of the facts not being clear. The same position reveals in the instant references also. We accordingly decline to answer the questions referred to us in the present references.

7.

The References accordingly stand disposed of with no order as to costs.

(M.S. Shah,J)

(D.A. Mehta,J)

zgs/-

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