U.T. Shah, Judicial Member - (1.) THIS is an appeal against the action of the Commissioner (Appeals), wherein he has upheld the order of the ITO rejecting the assessee's stand of partial partition and enhancing the assessment.
(2.) The assessee is an HUF. The assessment year is 1980-81 and the relevant previous year is Samvat year 2035 (ending on 21-10-1979). The facts of the case are: (a) The assessee-HUF consisted of five members, viz., Shri Pujalal Lallubhai Shah, Atulkumar Pujalal Shah, Sharadkumar Pujalal Shah, Pradeep Pujalal Shah (minor) and Smt. Indumatiben Pujalal Shah. (b) The assessee-HUF is a partner in three firms, viz., Pipe Dealers, Ahmedabad, Tube Dealers, Bombay and Pipe Distributors, Jaipur, having 32 per cent, 30 per cent and 39 per cent share, respectively. (c) The said three firms came into existence under the deeds of partnership, dated 29-3-1979, 5-4-1979 and 12-4-1979, respectively. (d) By a deed of partial partition, dated 29-9-1979, Shri Sharadkumar Pujalal Shah took 5 per cent share out of 32 per cent share of the assessee-HUF in Pipe Dealers along with a part of money standing in the account of the assessee-HUF in the said firm. (e) By a deed of partial partition, dated 3-10-1979, Shri Atulkumar Pujalal Shah took 5 per cent share out of 30 per cent share of the assessee-HUF in Tube Dealers along with a part of money standing in the account of the assessee-HUF in the said firm. (f) By a deed of partial partition, dated 4-10-1979, Shri Pujalal Lallubhai Shah took 4 per cent share out of 39 per cent share of the assessee-HUF in Pipe Distributors along with a part of money standing in the account of the assessee-HUF in the said firm. (g) Consequent upon the aforesaid partial partitions, fresh deeds of partnerships were executed in respect of the aforesaid three firms on 3-10-1979, 5-10-1979 and 5-10-1979, respectively, incorporating necessary changes. (h) The family consisting of four members filed returns declaring Rs. 29,150 being 27 per cent share from Pipe Dealers, Rs. 31,250 being 25 per cent share from Tube Dealers and Rs. 45,679 being 35 per cent share from Pipe Distributors and the ITO framed the assessments (on protective basis) on 2-3-1983, 31-3-1983 and 23-2-1983, respectively.
(3.) ON the aforesaid facts, the assessee-HUF took a stand before the ITO that due to the aforesaid partial partitions, it no longer remains a partner in any of the said three firms, therefore, share of profit from each of the said three firms was not includible in its total income.;