Commissioner Of Income Tax vs Jagdish Chand (Through Legal ...
1992 Latest Caselaw 583 Del

JUDGMENT

B.N. Kirpal, J.

1. In respect of the assessment years 1972-73 and 1975-76, the Income-tax Tribunal has referred the case and stated the following question to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the deletion of the share income of Rs. 24,925 in the assessment year 1972-73 and of Rs. 20,739 in the assessment year 1975-76 from the individual assessments of the assessed in these two year ?"

2. Shri Jagdish Chand was a partner of a firm, Messrs. Madan Lal Jagdish Chand. During the pendency of this reference, Shri Jagdish Chand died and his legal representatives had been brought on record. Shri Jagdish Chand had contended that his income from the said firm should be assessed in the hands of the Hindu undivided family. The order of the Income-tax Officer, for the assessment year 1972-73, was cancelled by the Commissioner of under section 263 of the Act and the Income-tax Officer was directed to pass a fresh order. On January 31, 1978, a fresh assessment order was passed under section 143(3) for the assessment year 1972-73 and the said income was taxed in the hands of Jagdish Chand as an individual. Similarly, for the assessment year 1975-76, on the same day, i.e., January 31, 1978, assessment was made on Shri Jagdish Chand, in respect of the share income, in his capacity as an individual.

3. Appeals were filed by the assessed and the same were allowed by the Appellate Assistant Commissioner. The Income-tax Officer was directed to exclude the share income from the income of the assessed as an individual. In arriving at this conclusion, the Appellate Assistant Commissioner followed an earlier decision of the Tribunal in respect of another partner of the firm where a similar contention had been raised.

4. The Revenue filed an appeal to the Tribunal which followed its earlier orders in the cases of other partners and upheld the assessed's contention and directed the deletion of the income from the income of Jagdish Chand in his individual capacity.

5. In the case of CIT v. Kishan Lal [1980] 124 ITR 19, it was held by a Division Bench of this court that the share of a partner received from the partnership firm could be impressed with the character of joint family property. Following the said decision, another Division Bench of this court, vide order dated February 24, 1992, in the case of the assessed's partner, namely, CIT v. Madan Lal Mehra [1992] 198 ITR 287, Income-tax References Nos. 11 to 13 of 1982, came to the conclusion that the share of income was rightly directed to be assessed in the hands of the Hindu undivided family. Earlier, in the case of assessed, Jagdish Chand himself, on September 24, 1987, in Income-tax Reference Nos. 57 to 62 of 1980, CIT v. Jagdish Chand Khanna, another Division Bench of this court had come to the similar conclusion and had held that the partner of a firm was entitled to impress his share in the partnership with the character of joint family property.

6. In view of the aforesaid decisions, the answer to the aforesaid question of law has to be in the affirmative and against the Department.

7. There will be no order as to costs.