TMI Blog2007 (8) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... restored." For other assessment years figures mentioned in the grounds of appeal are as under : Assessment year Amount (Rs.) 1992-93 426,639 1993-94 419,458 1994-95 393,883 1995-96 520,308 1996-97 557,407 1997-98 647,573 1998-99 780,478 1999-2000 993,793 2000-01 930,393 3. In the cross objections also the grounds are similar and for assessment year 1991-92, the grounds of C.O. read as under : "1. That the ld. CIT(A) erred, both in law and facts, in holding that the assessment order dated 19-1-2005 is not barred by limitation as much as the same have been passed after the expiry of one year from the end of the financial year in which the notice under section 148 was served and there was no stay for passing the assessment order by the Hon'ble High Court and even no 'benefit of doubt' should have been given to the Assessing Officer in the case in this respect. 2. That the ld. CIT(A) erred again both in law and facts, having not decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed judgment of the High Court and treat this question as deemed to have been referred for answering in accordance with law. Following the decisions of this Court in CIT v. Venugopal Inani [1999] 239 ITR 514 and ITO v. Smt. N.K. Sarada Thampatty [1991] 187 ITR 696 we answer the question in the negative, in favour of the revenue and against the assessee. The appeal is disposed of accordingly. There shall be no order as to costs." 6. While rejecting the claim of the assessee the Assessing Officer also mentioned that the assessee itself had claimed that there was no running business of the assessee when the claim of the partial partition was made and thus he observed that the order of partial partition passed under section 171 was not in accordance with law. Thus assessee cannot take the advantage of the said order to plead that no such addition should be made. 7. The brief facts are as under. The assessee-HUF has been in existence for the last about 40 years and it is also regularly assessed to income-tax. Previously there was a firm viz., M/s. Kedar Nath Bishan Lal which was carrying on the business of pakka arhita of gur and khandsari. The assessee-HUF had deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the assessee had carried out the issue of validity or otherwise a notice issued under section 148 before Hon'ble High Court in a writ petition and there was an order of Hon'ble High Court vide which Assessing Officer was considered to be restrained from proceeding to pass final order and thus giving benefit of doubt, the ld. CIT(A) had held that assessment was not barred by time as the same could not be framed within the statutory period there being an order of Hon'ble High Court. So far as it relates to validity or otherwise of reassessment proceedings the ld. CIT(A) in para 7.8 has observed that there were no valid reasons to take recourse of action under section 148. However he has dealt with the issue on merits also and has held that the facts in the case of Gopal Bansilal Inani ( supra ) were different, therefore, the said case had no applicability to assessee's case. He found that in the said case of partition was not accepted and therefore it was held that interest paid to coparcener could not be claimed by the HUF. Thus the CIT(A) has allowed relief to the assessee on merits. He held that in the present case of partitions were accepted by the departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad also given a finding that interest paid by the assessee to its coparcener emerges out of money deposited by them not out of the funds of HUF and these deposits represented on account of salary, rental income from the properties and income from agriculture. He observed that these deposits are in the nature of pure loans in the HUF out of the self-generated funds of coparceners and thus HUF has legitimately claimed deduction on account of interest paid to these coparceners. In this view of the discussion ld. CIT(A) had accepted the claim of the assessee regarding deduction on account of interest paid to the coparceners. Department is aggrieved with such deletion and the assessee in its C.O. has mainly contested the order of CIT(A) on the ground that it has wrongly been held that assessment was not time-barred. 10. The ld. D.R. pleaded that the partition affected by the assessee were not valid in the eyes of law and according to the decision of Hon'ble Supreme Court in the case of Gopal Bansilal Inani ( supra ) no such interest can be claimed by the assessee-HUF being interest paid to coparceners. Thus relying on the order of the Assessing Officer he pleaded that disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been passed only on 19-1-2005 thus the assessments are barred by time and it should be held that no assessment could be framed and the assessment framed is time-barred and, therefore, annulled. 14. Referring to the validity or otherwise of issue of notice under section 148, he pleaded that though ld. CIT(A) in para 7.8 has held that there were no valid reasons to take recourse under section 148, he should have held that assessment is invalid in spite of deleting addition on merits. He pointed out that for the assessment year 1992-93 assessment is framed under section 143(3) and there was no failure on the part of the assessee to disclose fully and truly all material facts, therefore, no valid assessment could be made beyond the period of 4 years from the end of the relevant assessment year and, therefore, the assessment is invalid. Thus he pleaded that on merits the order of CIT(A) should be upheld and on the issue of validity or otherwise of issue of notice under section 148 it be held that no valid reassessments have been made. Further he pointed out that if it is held that deletion was in accordance with law then the assessee will not press its cross objections as then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted and, therefore, income from properties were held to be income from HUF and not income of individual members. Thus it can be seen that both the above-mentioned cases which have been followed by Hon'ble Supreme Court in the case of Gopal Bansilal Inani ( supra ) are the cases where partition of HUFs were not accepted and in the circumstances it was held that income whatever was earned belong to the HUF as HUF was not disrupted. Whereas in the case of assessee as it has already been pointed out, there is no material on record to controvert that partitions were ever rejected or not accepted. Thus for making disallowance ratio of decision in the case of Gopal Bansilal Inani ( supra ) as wrongly been relied upon, as the facts of that case do not match with the facts of the present case. It has rightly been pointed out by ld. CIT(A) that according to decision of Hon'ble Supreme Court in the case of Sun Engg. Works (P.) Ltd. ( supra ) the judgment must be read as a whole and the judgment have to be considered in the light of question which were before the Court. A decision takes its colour from question involved in the case, in which it was rendered and while applying the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The said order was confirmed by Hon'ble Supreme Court. Here it will be pertinent to note that a specific finding has been given by ld. CIT(A) that the amount on which interest has been paid to coparcener does not represent the capital received on partition, but comprises of salary, income from house property, and agriculture etc. These findings have also not been controverted by revenue by placing any material on record. If these amounts do not represent the amounts received from HUF then there cannot be any question to disallow the same as the amounts standing to the credit of coparcener were owned by them in their individual capacity. 16. In view of the above discussion, we find no infirmity in the order of CIT(A) vide which the disallowance of interest had been deleted and we confirm his order on this ground. The appeals filed by the revenue are thus failed. 17. It has been pointed out earlier that it was mentioned by the ld. AR that if it is held that disallowance has rightly been deleted by the CIT(A) the assessee is not pressing the cross objections as the same will be of academic interest only. Therefore, we dismiss the cross-objections filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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