SUSHIL KUMAR AND SONS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE three references under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), pertain to the assessment year 1975-76 and have been made by the Income-tax Appellate Tribunal, Delhi Bench "E".

(2.) THERE was a Hindu undivided family known as Sushil Kumar and Sons (HUF). THERE was also a partnership firm named Sushil Kumar and Sons in which the karta of the aforesaid Hindu undivided family was, along with his wife, a partner representing the Hindu undivided family. During the course of the assessment for the assessment year 1975-76 of the Hindu undivided family a claim under Section 171 of the Act was made that on October 1, 1973, there was a partial partition in respect of a sum of Rs. 1,00,000 out of the capital of the Hindu undivided family invested in the said firm and a memorandum dated October 2, 1973, was executed. The sum of Rs. 1,00,000 was partitioned as under :

(3.) IN INcome-tax Reference No. 247 of 1983, the reference has been made at the instance of the partnership firm. IN consequence of the aforesaid partition, sums of Rs. 20,000 each were credited in the names of the aforesaid five persons/group of persons and a sum of Rs. 1,00,000 was debited to the capital account of the said Hindu undivided family. INterest was paid on the sum of Rs. 20,000 each aforesaid which because of the order under Section 171 rejecting the partition was disallowed and added back in terms of section 40(b) and was allocated to the share of the Hindu undivided family. The following question has been referred by the Tribunal for the opinion of this court :