THE COMMISSIONER OF INCOME TAX Vs. RAMCHANDRA LACHMINARAYAN

JUDGEMENT

(1.) THIS is a reference made at the instance of the Commissioner of Income Tax, Assam, under Section 66(2) of the Income Tax Act, 1922 (Act XI of 1922). The only point which the Tribunal has formulated for our consideration is -

(2.) THE relevant facts stated may be briefly recapitulated. A Hindu undivided family consisting, of Lachminarain Singhania, the father, and four sons governed by the Mitakshara school of Hindu law was being assessed for Income Tax as such till the assessment year 1952 -53. It appears to have had two sources of income (1) from business and (2) from Immovable properties. During the assessment year 1953 -54, the assessee claimed that a partial partition had been effected in respect of the business and that with effect from the beginning of Ramnavami 2009 Sambat (3 -4 -1952) a partnership with definite shares had been constituted between the father and the four sons, who were the coparceners of the joint family.

(3.) THE confusion as to the alleged discrepancy about the state of the accounts to which reference had been made by the Income Tax Officer and the Judicial Member of the Tribunal was also satisfactorily explained. The majority observed that even before the date of the instrument of partnership, there was a property account in the books of the Hindu undivided family. The capital cost of any of the Immovable properties owned by the family was never debited in the account books. All that was done was to show the income from each property in the property account on the credit side and the expenses of maintenance of such properties on the debit side of that account and the balance at the end of every year was transferred to the profit and loss account. In the assessment year also in view of paragraph (10) of the partnership deed, the net income of the property account was transferred to the profit and loss account of the firm. The above findings are very material and have an important bearing on the point under investigation.