COMMISSIONER OF INCOME TAX Vs. SATYANARAYAN MURTY K

JUDGEMENT

(1.) THIS is a reference made under Section 256(1) of the I.T. Act of 1961 (hereinafter referred to as "the Act"), by the Cuttack Bench of the Income-tax Appellate Tribunal. The following question has been referred for the opinion of the court:

(2.) WE are concerned with the assessment year 1974-75 previous year ending with March 31, 1974. An HUF was the owner of a business carried on in the name and style of Sri Durga Stores at Berhampur in Ganjam District. Up to the assessment year 1968-69, the said business was being assessed in the status of an HUF. During the accounting year 1968-69, K. Satyanarayana Murty (present assessee) claimed partition of the family assets amongst himself as the karta, his two major sons, Nirmal and Surendra, and three minor sons, Janardan, Srinivas and Pundarikakshya. Admittedly, the wife of Satyanarayana Murty was in existence at that time, but there was no material to show whether a share in the HUF property was allotted to her. An application made under Section 171 of the Act was accepted and the ITO, for the assessment year 1968-69, recorded the following order:

(3.) IT then remained to be considered whether the income of Kathoke Lodge was to be assessed in the hands of the appellant as an individual or could be assessed in the status of an HUF. The court analysed at length the Judicial Committee's decision in Kalyanji Vithaldas v. CIT [1937] 5 ITR 90 (PC), referred to the decision of the Bombay High Court in CIT v. Gomedalli Lakshminarayan [1935] 3 ITR 367 (Bom) and the appellate decision of the Privy Council taken from the decision of the Bombay High Court in CIT v. A. P. Swamy Gomedalli [1937] 5 ITR 416 (PC) and settled the legal position thus :