COMMISSIONER OF INCOME TAX Vs. KHEDKAR N P

JUDGEMENT

(1.) THE questions referred to us by the Tribunal are as under:

(2.) THIS matter was before us on August 31, 1984, and subsequently on September 10, 1984. On August 31, 1984, we had remanded the matter to the Tribunal for a fresh statement of case, as we were of the opinion that the reference could not be proceeded with without the two deeds of partition being on record, both dated March 22, 1968. After August 31, 1984, the Department had produced copies of the two partition deeds which were in Marathi. These were tendered and taken on the record on September 10, 1984. The Department also indicated that the Inspector at Pune had contacted the assessee and that the assessee was not desirous of appearing in the reference. We accordingly cancelled our earlier order dated August 31, 1984, and the reference was stood over till September 24, 1984, that is, today. In the meantime, the CIT was directed to supply office (English) translation of the two Marathi partition deeds. This has been done.

(3.) IT is rather unfortunate that right from the ITO to the Tribunal, the authorities have not paid proper attention to the two partition deeds. These are most material and ought to have been properly construed in order to ascertain the status of the assessee. If the first partition deed is properly perused, it would be more than clear that what was being partitioned was only the "cloth business" which was carried on at house No. 182, Bazar Peth, at Post Khed in the trade name Prahlad Laxman Khedkar. The first partition deed clearly shows that the larger HUF had properties other than the said cloth business. The said partition deed pertaining to the larger HUF of Prahlad Laxman Khedkar indicates that in 1955, agricultural lands had been partitioned and the partition given effect to by making necessary entries in the Government records. Thereafter, according to the recitals of the said deed, one of the sons, namely, Shriram, had separated and gone out of the family. The said Shriram had taken an amount of Rs. 17,000 in lieu of his share in cloth business, house at Bazar Peth, Khed, gold, jewellery and all other movable and immovable assets of the HUF. Thereafter, properties of the larger HUF are indicated on page 3 of the partition deed (pertaining to the larger HUF). They include a house named "Tapascharya" at Bazar Peth, Khed, gold, jewellery, furniture and other household articles. The partition deed goes on to say that the parties, P. L. Khedkar and N. P. Khedkar, had decided to partition only the assets and liabilities relating to cloth business run in the name of P. L. Khedkar, which would suggest that as far as the other properties are concerned, namely, the house at Bazar Peth, Khed, gold, jewellery, furniture and other household articles, the status of the joint family would continue and the HUF would own the said properties and if there was any income, actual or notional, flowing from the said properties, the larger HUF would continue to be assessable in respect of the said income. As far as the cloth business is concerned, the same was valued together with its goodwill at Rs. 1,42,000 and P. L. Khedkar and N. P. Khedkar received Rs. 71,000 in equal proportion. Thus N. P. Khedkar obtained Rs. 71,000 under the partition deed pertaining to the larger HUF.