COMMISSIONER OF INCOME TAX Vs. BALASUBRAMANIAN S

JUDGEMENT

(1.) IN the reference made under s. 256(1) of the I.T. Act, 1961, hereinafter referred to as "the Act", the following question is referred :

(2.) IN making the original assessment for the year 1960-61 to 1965-66, development rebate was allowed on the new machinery and plant installed by the HUF of which one Srinivasa Iyer was the karta and his son was a coparcener. It is not necessary for us to trouble ourselves with the figures. There was a partial partition of this family under which the machinery and plant were allotted to the two coparceners at their written down value. After the partition, the two members sold the said machinery and plant allotted respectively to them to the Gemini Pictures Circuit Private Ltd. On coming to know of the sale within a period of eight years from their installation the ITO proposed by his letter dated 6th February, 1971, to withdraw the development rebate on the ground that the machinery had been sold within the statutory period.

(3.) IN the present case, the ITO has applied s. 155(5). The question is whether it was proper for him, to do so. It is not in dispute that when a joint family is partitioned there is no transfer of any asset from the joint family to the erstwhile member when a particular asset is so allotted to him. We have already, in summarising the provisions, underlined the words "by the assessee" in order to emphasise that the transfer or sale contemplated by the provision is to be effected by the assessee and not by any other person. The joint family having gone out of existence, as far as this particular asset is concerned, there cannot be any sale or transfer by the joint family.