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Commissioner of Income-tax Vs. Parsumram Ghanashyamdas and Brothers - Court Judgment

LegalCrystal Citation
Subject;Direct Taxation
CourtGuwahati High Court
Decided On
Case NumberCivil Rule Nos. 24(M) to 30(M) of 1975
Judge
ActsIncome Tax Act, 1961 - Sections 26 and 256(2)
AppellantCommissioner of Income-tax
RespondentParsumram Ghanashyamdas and Brothers
Appellant AdvocateG.K. Talukdar and D.K. Talukdar, Advs.
Respondent AdvocateS.K. Sen, Adv.
Excerpt:
- - the answer to the questions referred to above depended on the interpretation of the material clauses of the partnership deed as well as section 26 of the act......justified in holding that as the deed of partnership dated july 18, 1960, showed that income from house property would be shared by each of the members equally, the share of each member of the association of persons in the house property is definite and ascertainable and on that basis in holding that the income from house property cannot be assessed in the hands of the association of persons ?(ii) whether, on the facts and in the circumstances of the case, the finding of the tribunal that the shares of the various members of the association of persons in the house property are definite and ascertainable, is not vitiated and, therefore, untenable in law, having been based on no evidence or on irrelevant consideration as regards the share in the property itself as distinct from share.....
Judgment:

Baharul Islam, Actg. C.J.

1. These seven Civil Rules involve common questions of fact and law. They arise out of orders of assessment of the ITO but the rules relate to different periods of asessment. This common judgment of ours will, therefore, dispose of all the seven rules. It will be sufficient if we refer to one rule only.

2. The application has been made by the department under Section 256(2) of the I.T. Act of 1961 (hereinafter referred to as 'the Act'), requiring the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, to refer the following questions of law to this court for answer :

'(i) Whether, on the facts and in the circumstances of the case and on a proper construction of section 26 of the Income-tax Act, 1961, the Tribunal was justified in holding that as the deed of partnership dated July 18, 1960, showed that income from house property would be shared by each of the members equally, the share of each member of the association of persons in the house property is definite and ascertainable and on that basis in holding that the income from house property cannot be assessed in the hands of the association of persons ?

(ii) Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the shares of the various members of the association of persons in the house property are definite and ascertainable, is not vitiated and, therefore, untenable in law, having been based on no evidence or on irrelevant consideration as regards the share in the property itself as distinct from share income ?'

3. The brief and material facts are that the assessee is an association of persons (AOP). The ITO assessed the assessee for the income from house property and held that within the meaning of Section 26 of the Act, the shares of the members of the AOP were not definite and ascertainable and, accordingly, he levied income-tax on the assessee. The assessee took an appeal

to the AAC of Income-tax, who reversed the finding of the ITO and held on a consideration of the materials before him, that the shares of income of the members of the AOP were definite and ascertainable and assessed accordingly. The revenue then preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal accepted the findings of the AAC and held that the shares in income of the members of the AOP were definite and ascertainable.

4. Being aggrieved by the order of the Tribunal, the department filed an application before the Tribunal to refer the above questions to this court for answers, but the Tribunal held : 'It cannot be doubted that the findings of the Tribunal that the share of each member of the AOP in the house property is definite and ascertainable is a finding of fact and the Tribunal has given this finding on the basis of the materials before it.' In that view, the Tribunal refused to make the reference as prayed for by the department.

5. Whether the shares in profit of the members of the AOP are definite and ascertainable appears to be a finding of fact ; but that finding of fact depends on the true and correct interpretation of several clauses of the partnership deed including the Clauses 6 and 12 which fell for consideration before the Tribunal. It is a settled principle of law that the interpretation of material clauses of material documents is a question of law. The answer to the questions referred to above depended on the interpretation of the material clauses of the partnership deed as well as Section 26 of the Act. In our opinion, therefore, a question of law does arise out of the order of the Tribunal and we, therefore, direct the Tribunal to state the facts and refer the first question of law set out above for answer by this court.

6. The question No. 2 is covered by question No. 1. Learned counsel for the petitioner also does not seriously press for its reference.

7. In the result, these applications are allowed; the rules are made absolute. Parties are to bear their own costs.

D. Pathak, J.

8. I agree.


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