COMMISSIONER OF INCOME-TAX V. MULCHAND MAGANLAL KAPADIA

ITR/198/1990

AI Insights

The case involves the Commissioner of Income-Tax appealing against a decision that dismissed the department's appeal regarding the assessment of income of minor sons in the hands of their father, Mulchand Maganlal Kapadia, who was a partner in a firm representing his Hindu Undivided Family (HUF). The Income Tax Officer (ITO) had included the income of the minor sons in the father's individual capacity for the assessment years 1973-74 to 1975-76 under section 64(1)(ii) and for 1976-77 to 1980-81 under section 64(1)(iii) of the Income Tax Act. The Appellate Assessment Commissioner and the Tribunal both overturned this decision, relying on the precedent set by the Dinubhai Ishvarlal Patel vs. I.T.O. case. The High Court of Gujarat, after reviewing the submissions and precedents, upheld the Tribunal's decision, favoring the assessee.

• Counselvise Citation: [2001] 140 COUNSELVISE.COM (IT) 743929 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 09-10-2001
• Assessment Year: misc
• Other Referred Cases: Dinubhai Ishvarlal Patel vs. I.T.O., 118 ITR 122, C.I.T. vs. Vallabhdas Manjibhai (1997) 163 ITR 59, C.I.T. vs. Om Prakash & Ors., 217 ITR 785
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SERVED BY RPAD N
• Assessee Lawyers: B B NAYAK
• Keywords: Assessment; HUF; Income inclusion; Income Tax; Minor Sons; Partnership
• Section: 64(1)(iii); 64(1)(ii)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 198 of 1990 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH Sd/- and Hon'ble MR.JUSTICE D.A.MEHTA Sd/- ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus MULCHAND MAGANLAL KAPADIA -------------------------------------------------------------- Appearance: MR BB NAYAK FOR MR MANISH R BHATT for Applicant. SERVED BY RPAD - (N) for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA Date of decision: 09/10/2001 ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) In this reference at the instance of the revenue, the following questions have been referred for the respective assessment years mentioned hereinafter :- For assessment Years :1973-74, 1974-75 and 1975-76 : \"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the department's appeal holding that the income cannot be assessed in the hands of the assessee u/s.64(1)(ii) of the Act ?\" For assessment Years : 1976-77 to 1980-81 : \"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in dismissing the department's appeal holding that the income cannot be assessed in the hands of the assessee u/s. 64(1)(iii) of the Act ?\" 2 We have heard Mr.B.B.Nayak, learned Counsel for the applicant-revenue. Though served none appears for the respondent-assessee. 3 The assessee was a partner in the firm representing his HUF. While framing the assessment the I.T.O. held that the income of the minor sons of the assessee who were admitted to benefits of partnership in the said firm was includible in the hands of the assessee in his individual capacity. This was sought to be done in view of the provisions of section 64(1)(ii) for the assessment years 1973-74 to 1975-76 and under the provisions of section 64(1)(ii) for the remaining assessment years 1976-77 to 1980-81. The Appellate Assessment Commissioner cancelled the assessment framed by the I.T.O. relying on the decision of this Court in Dinubhai Ishvarlal Patel vs. I.T.O., 118 ITR 122, apart from the noting that some of the minor sons had become major during some of the years under consideration. The AAC also opined that since the assessee as an individual has no other income there was no question of any inclusion of the income of the minor children with the income of the assessee as an individual. The Tribunal confirmed the order of the AAC by relying on the same decision of this Court in Dinubhai Ishvarlal Patel's case (Supra). Hence, this reference at the instance of the revenue. 4 At the hearing of this reference our attention has been invited to the decision of this Court in C.I.T. vs. Vallabhdas Manjibhai (1997) 163 ITR 59, wherein this Court followed the decision in Dinubhai Patel's case (Supra). The decision of this Court in the aforesaid case has been confirmed by the Apex Court in C.I.T. vs. Om Prakash & Ors., 217 ITR 785. 5 Mr.Nayak, learned Counsel for the revenue, however, submits that since the department's appeal against the decision of this Court in Dinubhai Patel's case (Supra) is pending before the Apex Court, the controversy may not be treated to have been finally concluded. In view of the decision of the Apex Court in C.I.T. vs. Om Prakash (Supra), we do not think that we should keep this reference of 1990 pending. Following the aforesaid decision in case of C.I.T. vs. Om Prakash (Supra), we are of the view that the Tribunal was right in law in holding that the income in question could not be assessed in the hands of the assessee under section 64(1)(ii) or 64(1)(iii) of the Act for any of the aforesaid assessment years under consideration. 6 Accordingly, our answer to both the questions is in the affirmative i.e. in favour of the assessee and against the revenue. 7 The reference stands disposed of accordingly with no order as to costs. Sd/- Sd/- (M.S.Shah,J) (D.A.Mehta, J) m.m.bhatt "