COMMISSIONER OF INCOME TAX Vs. BABULAL JOSHI

JUDGEMENT

(1.) THE revenue moved this court under Section 256(2) of the I.T. Act of 1961, for a direction to the Income-tax Appellate Tribunal, Cuttack Bench, to state a case and refer three questions said to be of law in relation to live assessment years being 1970-71 to 1973-74 and 1974-75. On January 15, 1979, a Bench of this court, to which one of us was a party, called upon the Tribunal to state a case in respect of each of the assessment years and refer the following common question :

(2.) ONE Chunilal Joshi died on July 23, 1969, leaving behind him his only son, Babulal, as successor to his self-acquired properties which consisted of one house and the share capital in a firm consisting of Chunilal and Babulal. Upon the death of Chunilal, Babulal treated the partnership business as a proprietary one and the share capital of his father was treated as a loan from the HUF consisting of Babulal and his children, until, on October 18, 1971, the said capital was withdrawn and invested in the firm styled as M/s. Chunilal Babulal. On November 4, 1972, the said business was partitioned. Babulal filed a return showing his status as an HUF in respect of the income from the house property and the income earned from the capital left by Chunilal. For the assessment year 1974-75, a claim was laid for registration of the firm, Chunilal Babulal. The ITO treated the assessee as an HUF for the assessment years 1970-71 to 1973-74, allowed the claim of partition and granted registration of the firm in the last of the assessment years under consideration.