COMMISSIONER OF INCOME TAX GUJARAT Vs. ASHOKBHAI CHIMANBHAI

JUDGEMENT

(1.) The respondent was a Hindu undivided family consisting of Ashokbhai the manager-his wife Shobhana and his minor son Chirag. Ashokbhai was a partner in a firm styled Messrs Amrit Chemicals with a share of five annas in every rupee in the profit and loss. It is common ground that the beneficial interest in the profits of the firm falling to the share of Ashokbai belonged to the undivided family. The year of account of the Hindu undivided family was the Samvat year - 1st of Kartika to 30 Ashwin. The year of account of Messrs Amrit Chemicals was the calendar year according to the Gregorian calendar.

(2.) By deed dated November 12, 1955, the Hindu undivided family was disrupted, and the property of the family was divided. The following are the material clauses of the deed of partition:

(3.) In proceedings for assessment for 1955-56 - the corresponding previous year being October 27, 1954 to November 14, 1955 - the Hindu undivided family-hereinafter called 'the assessee' contended that the share in the profits of M/s. Amrit Chemicals for the calendar year which accrued on or after December 31, 1955 belonged to Ashokbhai in his individual capacity and was not liable to be included in the taxable income of the assessee, because it had been declared under the partition deed to belong exclusively to Ashokbhai as from January 1, 1955, and that in any event since the firm made up its accounts at the end of the calendar year, the assessoe had no interest in the share of profits for the calendar year 1955,which accrued at the end of that year to Ashokbhai in his individual capacity. The Income-tax Officer ordered that Rs. 21,051 received by Ashokbhai as five annas share in the profits of the firm be included in the computation of the total income of the assessee. In appeal the Appellate Assistant Commissioner held that on November 12, 1955 Ashokbhai ceased to represent the Hindu undivided family and the share of profits received from the firm had to be apportioned between the assessee and Ashokbhai. This order was confirmed by the Income-tax Appellate Tribunal.