ADDITIONAL COMMISSIONER OF INCOME TAX Vs. GOVINDOSS PURUSHOTHAMDOSS

JUDGEMENT

(1.) AT the instance of the Addl. CIT, the following question has been referred to us under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as " the Act"):

(2.) THERE was an HUF which owned a property known as "Gokulbagh" measuring 29 acres, having purchased it in 1919. The family was a trading family carrying on business of money-lending and this property was shown as a business asset. On March 27, 1922, a partnership deed came into existence between two members of the said family, viz., Purushothamdoss Gokuldoss and Jumnadoss Dwarakadoss. It is not clear as to whether this property was treated as the said firm's property. However, on 6th November, 1953, the money-lending business carried on by the said family was divided between the members thereof and the divided members executed a partnership deed for carrying on the business under the name and style of M/s. Gokuldoss Jumnadoss and Co. In this partnership deed, Purushothamdoss Gokuldoss, Jumnadoss Dwarakadoss and the major sons of Purushothamdoss Gokuldoss were shown as partners. The property "Gokulbagh" was transferred to this firm and it was being shown as an asset of the firm in the firm's books and its balance-sheets right up to 1st April, 1963, at the value of Rs. 94,000.

(3.) THE assessee appealed and in the grounds of appeal filed before the AAC the assessee pointed out that the ITO ought to have appreciated that, on the facts and in the circumstances of the case, the property in question was the property of the firm which was acquired by the appellant (assessee) in a mode other than that mentioned in Section 49(iii)(b) and his cost is the market value as on that date January 1, 1964. THE assessee contended that the market value as on January 1, 1964, should have been taken. THE AAC held that the records disclosed that the entire property had been treated as an asset of the firm and that, therefore, the partners of the firm could be said to be co-owners thereof, and that the cost of the portions of the property allotted to the assessee would be the same amount as recorded in the books of the firm. He, however, held that the assessee was entitled to opt for the value as on April 1, 1954, and fixed the market value on that day at Rs. 800 per ground. He modified the assessment accordingly.