COMMISSIONER OF INCOME-TAX BOMBAY CITY-II BOMBAY Vs. AMRITLAL DAYABHAI

JUDGEMENT

(1.) The question that has been referred to us by the Tribunal at the instance of the Commissioner of Income-tax, Bombay City-II, Bombay, for our opinion run thus :- "Whether the intention of abandonment of his separate rights in his property which is found to be the separate property of Amritlal Dayabhai, can be inferred from the mere fact of omission by Amritlal Dayabhai to keep it separate from February, 1952 to 1957 ?"

(2.) The question relates to assessment year 1958-59 to 1961-62, corresponding to the previous years are S.Y. 2013 to 2016. The assessee is a H.U.F. comprising of Amritlal Dayabhai and his minor son. Amritlal Dayabhai was originally a member of the H.U.F. named Moolchand Tribhuvandas. There was a partition in 1940 between the members of bigger H.U.F. at which Amritlal Dayabhai received the sum of Rs. 20,824/-. Amritlal Dayabhai contributed that amount (Rs. 20,824/-) as his capital and became a partner in S.Y. 1998 in the partnership firm of M/s. Amritlal Hiralal. The amount was credited in the account book of the firm in an account opened in the same of Amritlal Dayabhai. The profits that fell to the share of Amritlal Dayabhai were credited and withdrawals for his household expenses were debited to that account. It appears that by using several withdrawals made from that account Amritlal purchased immovable properties and share of joint stock companies and income arising from those properties from time to time was also credited to that account. On 21-12-1950. Amritlal received Rs. 38,000/- as a gift from his father. This amount was also credited to that account standing in his name in his name in the account books of M/s. Amritlal Hiralal. Admittedly Amritlal Dayabhai got a son, who was born on 13-12-1952. The initial amount of Rs. 20,824/- received by Amritlal Dayabhai in the partition in 1940, the amount added to it later on as well as the amount of Rs. 38,000/- credited on 21-12-1950 belonged solely to Amritlal Dayabhai till the son was born to him.

(3.) It appears that for the first time in S.Y. 2013 relevant for the assessment year 1958-59. Amritlal Dayabhai debited the account which stood in his name in the books of the firm and opened a separate account in the books of that firm to which Rs. 56,221/- were credited. The narration of that entry showed that the amount of Rs. 38,000/- received by Amritlal Dayabhai was a gift from his father which along with its interest amounted to Rs. 56,221/- and this new account was opened for the purpose of separating and separate the joint family from the individual funds of Amritlal Dayabhai. For that year viz., assessment year 1958-59 therefore Amritlal Dayabhai filed two returns, one on the status of H.U.F. of Amritlal Dayabhai and another in the status of individual Amritlal Dayabhai. The Income-tax Officer assessed the income from the property in the hands of Amritlal Dayabhai individually and the rest of the income in the name of H.U.F. in the hand if Amritlal Dayabhai. Amritlal Dayabhai preferred a appeal to the Appellate Assistant Commissioner against his individual assessment the question raised before the A.A.C. was whether the correct status of Amritlal Dayabhai was that of an individual or that of a H.U.F. and the question incidentally arose for decision whether the amounts of Rs. 38,000/- which received by Amritlal Dayabhai as a gift from his father in property of H.U.F. of the separate property of Amritlal Dayabhai. The A.A.C. held that the correct status of the assessee was H.U.F. and the entire was assessable in the hands of H.U.F. Before the Appellate Tribunal also on a similar question being raised the Tribunal took the view that even took the view that even assuming that the amount of Rs. 38,000/- was a separate property of the assessee and he had never any intention to waive his separate rights with regard to that amount it was clear from the account that the amount was spent by the assessee and nothing remained with which to open a new account in 1957 with the sum of Rs. 56,221/- as representing the sum of Rs. 38,000/- with interest. The Tribunal held that it was only if the sum had not been spent that a question could have arisen about the intention of the assessee not to throw it into the common stock.