COMMISSIONER OF INCOME TAX Vs. PURSHOTTAM DAS RAIS

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following question under Section 256(2) of the Income -tax Act, 1961 (for short, 'the Act'), for opinion of this court :

(2.) THE facts as stated in the statement of case by the Appellate Tribunal are that the assessee is an individual, that during the accounting year corresponding to the assessment year 1974 -75 he was a partner in Purshottam Das Rais, Gorakhpur, that the said firm had interest income, inter alia, that the income from interest accrued mainly on fixed deposit receipts or on bank accounts; consequently, the assessee claimed deduction under Section 80L of the Act in respect of his share in the income of the aforesaid firm having accrued under the head 'Interest', that the said claim of the assessee was not considered by the assessing authority ; that the assessee then appealed to the Appellate Assistant Commissioner who considering the provisions of Sub -section (2) of Section 67 of the Act, directed the assessing authority to allow the assessee's claim under Section 80L ; and that the Revenue then carried the dispute to the Income -tax Appellate Tribunal which confirmed the order of the appellate authority. This is how the aforesaid question was referred to this court at the instance of the Revenue.

(3.) IN CIT v. Brij Raman Das : [1979]118ITR397(All) , which has already been relied upon by the Tribunal in this case, it was held that income under each head accruing to a partnership firm will retain its character as such even though it is assessed all over again in the hands of the individual partner. This court further held that the process of allocation of the income in the hands of the partner does not change the head under which it was determined in the case of the firm, In short, it was held that the character of income will remain the same before and after the allocation of income in the hands of the partners. This authority was followed by the Bombay High Court in CIT v. Gopalkrishna M. Singre : [1995]214ITR443(Bom) . The Orissa High Court, however, took a contrary view in CIT v. Janardan Subudhi : [1981]131ITR287(Orissa) .