Issues Involved: 1. Legality of the Appellate Tribunal's decision to set aside the order of the Commissioner of Income-tax u/s 263 of the Income-tax Act, 1961. 2. Determination of overriding title or diversion of income before the assessee received the share from the firm.
Summary:
Issue 1: Legality of the Appellate Tribunal's Decision The primary question was whether the Appellate Tribunal was right in law in setting aside the order of the Commissioner of Income-tax made u/s 263 of the Income-tax Act, 1961. The Commissioner had set aside the Income-tax Officer's order, which taxed only 1/4th of one-sixth profit in the hands of Smt. Minalben, considering it erroneous and prejudicial to the interests of the Revenue. The Tribunal found that although the Income-tax Officer's order was erroneous, it was not prejudicial to the interests of the Revenue since 75% of the remaining share was already taxed in the assessments of three minors. The Tribunal concluded that the Commissioner's order would result in double taxation, which is not permissible. The High Court upheld the Tribunal's decision, stating that the Commissioner did not address whether the legitimate revenue due to the exchequer had been realized or not. The High Court emphasized that both conditions'erroneous order and prejudice to the interests of the Revenue'must be satisfied for the Commissioner to exercise powers u/s 263. The question was answered in the affirmative, in favor of the assessee and against the Revenue.
Issue 2: Overriding Title or Diversion of Income The Tribunal also referred a question regarding whether there was an overriding title or diversion of income before the assessee received the share from the firm of Messrs. Atmaram Maneklal and Co. However, since no one appeared on behalf of the assessee to argue this point, the High Court declined to examine and answer this question. The reference was disposed of with no order as to costs.
9911796707
