INCOME TAX OFFICER Vs. BISHAMBER LAL
INCOME TAX APPELLATE TRIBUNAL
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F.C. Rustagi, Judicial Member -
(1.) THIS is a departmental appeal in the case of Mr. Bishamber Lal pertaining to the assessment year 1973-74 for which the relevant previous year ended on 31-3-1973. The sum and substance of all the grounds is that the share income of Shakuntla Devi, assessee's wife and those of two minor sons, Mr. Sanjay Kumar and Mr. Ajay Kumar, from Amar Lal Bishamber Lal should have been added in the hands of the assessee under Section 64 of the Income-tax Act, 1961 ('the Act'), as the said income to the assessee's wife and his minor sons arose out of collusive gifts of share in the partnership firm between Mr. Bishamber Lal and his brother Mr. Amar Lal. In order to appreciate the issue, it is very essential to narrate the facts in brief.
(2.) There was a firm styled as Amar Lal Bishamber Lal constituted of Mr. Amar Lal and Mr. Bishamber Lal, two real brothers, having 50 per cent share each, which continued up to 31-3-1972. Out of the accounts of the said firm, both Mr. Bishamber Lal and Mr. Amar Lal from 1-4-1970 to 31-3-1972 gifted Rs. 20,000 to their respective wives, i.e., Mr. Bishamber Lal gifted the said sum to his wife Shakuntla Devi whereas Mr. Amar Lal gifted the very said sum of Rs. 20,000 to his wife Bhagwan Devi. Both Mr. Bishamber Lal and Mr. Amar Lal also gifted Rs. 2,000 each to four minor sons, i.e., Mr. Bishamber Lal to Mr. Sanjay Kumar and Mr. Ajay Kumar, whereas Mr. Amar Lal to Mr. Ravinder Kumar and Vinod Kumar, which would be clear from the following chart :
Mr. Bishamber Lal
With effect from 1-4-1972, Mr. Bishamber Lal got out of the said firm of Amar Lal Bishamber Lal and Shakuntla Devi, wife of Mr. Bishamber Lal, joined Mr. Amar Lal as his partner and Mr. Sanjay Kumar and Mr. Ajay Kumar, minors, were admitted to the benefits of the partnership. On the other hand, another firm styled as Bhajrang Bali Rice Mills, Pipli, was floated as a partnership concern by Mr. Bishamber Lal who was joined by Bhagwan Devi as partner in which Mr. Ravinder Kumar and Mr. Vinod Kumar, minors, were admitted to the benefits of the partnership. In both the firms, following were the profit-sharing ratio as per two different deeds executed for the respective firms on 17-4-1972 :
Amar Lal Bishamber Lal
The revenue accorded registration to both the abovesaid firms separately and assessments in the cases of Mr. Bishamber Lal and Mr. Amar Lal and their respective wives Shakuntla Devi and Bhagwan Devi were also framed under Section 143(1) in respect of their individual shares.
(3.) SUBSEQUENTLY, the revenue required both Mr. Bishamber Lal and Mr. Amar Lal to file their returns under Section 148 and in the course of said assessments the ITO added the share income of Shakuntla Devi, Mr. Sanjay Kumar and Mr. Ajay Kumar earned from Amar Lal Bishamber Lal in the hands of Mr. Bishamber Lal and similarly in the hands of Mr. Amar Lal the ITO subjected to tax the share income belonging to his wife Bhagwan Devi and minor sons, Mr. Ravinder Kumar and Mr. Vinod Kumar, from Bhajrang Bali Rice Mills.;
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