Delhi High Court
Commissioner Of Income-Tax vs Madan Lal Mehra. on 24 February, 1992
Equivalent citations: 1992 198 ITR 287 Delhi
Author: B Kirpal
Bench: B Kirpal, S Duggal
JUDGMENT
B.N. Kirpal, J.
1. In respect of the assessment years 1972-73, 1973-74 and 1975-76, the Tribunal has referred the following questions of law to this court :
"1. Whether, on the facts and in the circumstances of the case, the declaration made on December 4, 1966, by the assessed impressing his one-sixth share in the firm of Messrs. Madan Lal Jagdish Chand with the character of the joint family property with effect from November 12, 1966, was valid in law ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that impressing of a share in a firm with the character of joint family property was valid in law ?"
2. The firm, Messrs. Madan Lal Jagdish Chand, has six partners. Originally, the assessment was made in respect of each partner, but vide order dated September 9, 1975, in respect of the assessment year 1972-73, the Commissioner exercised his revisional jurisdiction under section 263 of the Income-tax Act, 1961, and directed that a fresh assessment is to be reframed. Thereafter, a fresh assessment was made, and the total income was assessed in the hands of the assessed.
3. An appeal was filed with the Appellate Assistant Commissioner. The contention of the assessed was that, by a deed of declaration dated December 4, 1966, the assessed's one-sixth share in the firm, Messrs. Madan Lal Jagdish Chand, had been impressed with the character of joint family property, with effect from November 12, 1966. The submission was that the income from the said firm did not belong to the assessed in his individual capacity, but belonged to the Hindu undivided family, of which he was a member. This appeal was accepted, but the Revenue came up in appeal before the Tribunal. In respect of the assessment years 1973-74 and 1975-76 also, the assessed was successful before the Appellate Assistant Commissioner, and in that case also, the Department came up in appeal to the Tribunal. The Tribunal dismissed the Department's appeals, and thereafter have referred the aforesaid two questions to the court.
4. It appears that some other partners of this firm have similarly made declarations seeking to impress their share in the partnership with the character of joint family property. They have also succeeded before the Tribunal and the matter came up before this court in Income-tax References Nos. 57 to 62 of 1980 (CIT v. Shri Jagdish Chand Khanna). Following an earlier decision of this court in the case of CIT v. Kishan Lal [1980] 124 ITR 19, it was held in J. C. Khanna's case that the share had been impressed with the character of joint family property and, therefore, the income would not be assessed in the individual's hands. The facts in the present case are identical to the facts of J. C. Khanna's case. Both the present assesseds and J. C. Khanna were the partners of the same firm, namely, Messrs. Madan Lal Jagdish Chand, and following the decision of this court in Income-tax References Nos. 57 to 62 of 1980, decided on September 24, 1987, the questions of law are answered in the affirmative and in favor of the assessed. There will, however, be no order as to costs.
