COMMISSIONER OF INCOME TAX Vs. GORDHANDAS VALLABHDAS KAPADIA

JUDGEMENT

(1.) IN this consolidated reference made by the Tribunal two issues are involved, namely, whether the entire property of the bigger HUF was partitioned amongst the 7 smaller assessees HUFs and (ii) whether the assessee HUFs are entitled to benefit under S. 54 of the IT Act, 1961 (the Act).

(2.) THIS reference relates to asst. yrs. 1971 72 and 1972 73. There was a bigger HUF of one Shri Vallabhdas Chaturbhuj Kapadia having a property on the Walkeshwar Road. The Karta of that bigger HUF Vallabhdas died some time in 1945 leaving behind his widow, one son Gordhandas and three daughters. The widow died some time in April, 1966. During her life time, she alongwith her son Gordhandas lived in the said Walkeshwar property. Gordhandas had six sons Vijay, Krishna, Pratap, Rajesh, Dalip and Ravindra. On the death of the widow of the late Vallabhdas, the said Walkeshwar property came in the hands of Gordhandas and his sons. The three daughters of the late Vallabhdas had filed a suit for their rights in the said Walkeshwar property by virtue of they being daughters of late Vallabhdas as well as his widow. In a settlement, these three daughters and Gordhandas got 1/4th share each out of 1/2 share of the widow. In this way, the HUF of Shri Gordhandas Vallabhdas Kapadia got 5/8th portion in the said property. Thereafter, the said property was given on 98 years lease to Shri Ramniklal Talakshi Doshi who was carrying on business in partnership under the name and style of M/s Sheela Builders. M/s Sheela Builders started putting up super structure some time in 1968 after demolishing the old structure. The construction of the new property was completed in May, 1970. Meanwhile, on 20th March, 1970, the HUF of Shri Gordhandas Vallabhdas Kapadia partitioned its 5/8th portion in the said Walkeshwar property and each of the members, i.e., Gordhandas and his six sons got 1/7th share. The smaller HUFs of Gordhandas and his sons sold their respective share in the said property and the capital gains earned by them was invested in their new residential property.

(3.) THE assessee HUFs took up the matter in appeal to the Tribunal and argued for acceptance of their contentions. In its order under reference the Tribunal accepted both the contentions of the assessee HUFs.