TMI Blog1986 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... Company; and (ii) the amount of Rs. 5,000 standing in the said firm's books to the assessee's credit as accumulated profit stood converted into joint property of the Hindu undivided family headed by the assessee as karta ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that conversion of the said properties into joint property of the Hindu undivided family did not involve transfer within the meaning of section 60 read with section 63(b) of the Income-tax Act? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that only a portion (namely, 1/7th portion) of the share income earned by the partner, Rajendra P. Bhow, from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, the Income-tax Officer held that even if blending purported to be effected in the assessee's case is valid under Hindu law, section 60 of the Income-tax Act would come into play, inasmuch as the assets giving rise to the share income did not stand transferred to the Hindu undivided family in whose favour the overriding title was intended to be credited. Copy of the declaration dated October 20, 1972, is annexure " A ", and copy of the Income-tax Officer's order is annexure " B " to this reference. Being aggrieved by the said order of the Income-tax Officer, the assessee took the matter in appeal to the learned Appellate Assistant Commissioner of Income-tax, where he urged that the Hindu undivided family consisted of his father, mothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its finding as aforesaid, the Tribunal dismissed the appeal. Hence, this reference. Mr. B. R. Shah, the learned advocate for the Revenue, contended, as was contended before the Tribunal, that the possibility of the partnership firm suffering losses could not be ruled out; in such circumstances, throwing of his share of partnership into the Hindu undivided family can be said to be onerous. Such a question has been decided by a Division Bench of this court, to which one of us was a party, in CIT v. Keshavlal Prabhudas Shah [1981] 131 ITR 229. It has been observed therein (at p. 232): " It is not disputed, and indeed it cannot be, that the share in a partnership firm is an asset. It was not shown that there were outstanding debts or los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided family through the act of impressing such separate property with the character of the Hindu undivided family property involves "transfer" within the meaning of section 60 read with section 63(b) of the Income-tax Act, has also no merit. It is settled position of law that when a coparcener throws his individual property into the common stock or common hotchpotch of the Hindu undivided family and thereby converts that property into a joint family property, with a desire to blend his separate property with the coparcenary property, separate property of the member is said to be impressed with the character of joint family property and thereafter be cannot make a separate claim over the said property. The separate property of a Hindu coparc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the common hotchpotch amounted to a " transfer " within the meaning of the said section. Reference has been made to the case of CIT v. M. K. Stremann [1965] 56 ITR 62 (SC), wherein the assessee first threw his private properties into the common stock and afterwards there was a partition amongst the members of the family which included his two minor sons and a minor daughter represented by their mother. The question arose whether the partition in question amounted to a transfer of assets by the assessee to the three minor children so as to attract the provisions of section 16(3)(a)(iv) of the Indian Income-tax Act, 1922. In that case, the Revenue did not contend before the Supreme Court that the act of the assessee in throwing into common st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal and answer question No. 2 in the affirmative. So far as question No. 3 is concerned, in view of our answer to question No. 2, the Tribunal is right in law in holding that only a portion, viz., 1/7th portion of the share income earned by the partner, Rajendra P. Bhow (assessee), from the said firm was includible in the computation of the assessee individual's income, in view of the provisions of section 64(2) of the Income-tax Act, as in force during the assessment period in question. We, therefore, answer question No. 3 also in the affirmative. In the result, we affirm the view taken by the Tribunal and answer all the questions in the affirmative and against the Revenue. Reference is answered accordingly with no order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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