COMMISSIONER OF INCOME TAX Vs. ANASUYA DEVI

JUDGEMENT

(1.) This application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is filed by the Commissioner of Income-tax seeking to raise the following five questions of law :

(2.) The Tribunal declined to refer any of the five questions to this court under section 256(1) of the Act and hence this application under section 256(2) of the Act.

(3.) It is not necessary to set out the facts in great detail. It is perhaps enough if we refer to the salient facts which have a bearing on the questions sought to be referred. The assessee and her two sons are co-owners of building in Himayatnagar, Hyderabad. The property was under self-occupation. As the property was situate in a lucrative locality, the assessee and her sons thought of converting the property as a commercial asset and entered into an agreement of partnership with Tirumala Construction Company on 16/03/1979. According to the terms of the partnership, the property owned by the assessee and her sons was thrown into the common stock of the partnership so that the property became partnership property under section 14 of the Partnership Act. In consideration of the assessee and her two sons throwing the property in to the partnership stock, their capital accounts were credited with a sum of Rs. 8,00,000 in agreed shares. The question that arose for consideration in the income-tax assessments was whether the assessee, as the co-owner of the property, was liable to be taxed on the difference between the cost of the property and the consideration credited to the assessees capital account in the books of the partnership firm.