| Case ID |
37261d84-694b-4c66-a421-e378222741a1 |
| Body |
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| Case Number |
IT REFERENCE No. 76 OF 1971 |
| Decision Date |
Mar 03, 1980 |
| Hearing Date |
|
| Decision |
The Delhi High Court held that the transfer of the partner's share in the partnership to the Hindu Undivided Family (HUF) was valid. The court affirmed that when an asset yields income, it cannot be treated as a liability. The Income Tax Officer's rejection of the assessment regarding the transfer was overturned, as the Tribunal found the share to be a lucrative source of income. The court concluded that the income derived from the partnership share was taxable in the hands of the joint family rather than the individual partner. This decision hinged on established legal principles regarding the rights of members of a Hindu Undivided Family to assign self-acquired property to the family. |
| Summary |
In the landmark case of IT Reference No. 76 of 1971, the Delhi High Court addressed the taxation of income derived from a partnership share transferred to a Hindu Undivided Family (HUF). The case revolved around the interpretation of the Income-tax Act, 1961, particularly Section 4, and the Indian Partnership Act, 1932, specifically Section 29. The court ruled that assets yielding income should not be classified as liabilities, reinforcing the rights of coparceners in Hindu law to transfer self-acquired property to the HUF. The final decision clarified that the income generated from the partnership should be assessed in the hands of the HUF, not the individual partner, setting a significant precedent in tax law and family property rights. This case is crucial for understanding the legal framework governing the taxation of partnership income within the context of Hindu family law. |
| Court |
Delhi High Court
|
| Entities Involved |
Not available
|
| Judges |
D.K. Kapur,
Yogeshwar Dayal
|
| Lawyers |
M.L. Verma,
Mohan Beharilal,
Vishnu Mathur
|
| Petitioners |
Commissioner of Income tax
|
| Respondents |
Kishan Lal
|
| Citations |
1980 SLD 1041,
(1980) 124 ITR 19
|
| Other Citations |
Mallesappa Bandeppa Desai v. Desai Mallappa [1961] 3 SCR 779,
Lakkireddi Chinna Venkata Reddi v. Lakkireddi Lakshmama [1963] AIR 1963 SC 1601,
Addanki Narayanappa v. Bhaskara Krishnappa [1966] AIR 1966 SC 1300,
CIT v. Pushpa Devi [1971] 82 ITR 7 (Delhi),
Surjit Lal Chhabda v. CIT [1975] 101 ITR 776 (SC)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Partnership Act, 1932
|
| Sections |
4,
29
|