The assessee, a partner in the partnership firm, known as M s. Kinariwala J.K. Industries, Ahmedabad, for short, the firm was having ten per cent share therein.
In the Assessment Year 1974 75, he claimed that as fifty per cent of the income attributable to his share from the firm, stood transferred to the Trust resulting in diversion of income at source, the same companyld number be included in his total income for the purpose of his assessment.
At the instance of the Revenue, the Income Tax Appellate Tribunal for short, the Tribunal referred the following questions, under Section 256 1 of the Income Tax Act, 1961 hereinafter referred to as the Act , for the opinion of the High Court Whether, on the facts and in the circumstances of the case, 50 per cent out of the assessee s ten per cent, right, title and interest in the partnership firm of Messrs. Kinariwala R.J.K. Industries belongs to Sunil Jivanlal Kinariwala Trust and the income arising therefrom belongs to the said trust by overriding title?
That is how, the appeal came to be filed and is before us.
Thus the afore mentioned questions of law came to be referred to the High Court by the Tribunal.
Thereafter, the Commissioner cancelled the registration of the partnership firm under the Act on the ground that it did number specify the companyrect shares of the said two persons in the partnership.
2002 Supp 4 SCR 650 The Judgment of the Court was delivered by SYED SHAH MOHAMMED QUADRI, J. Civil Appeal No.
That companytention was upheld by the Tribunal.
191 of 1980 dated 29th October, 1993 Sunil J. Kinariwala v. Commissioner of Income Tax, reported in 1995 211 I.T.R. 127.
Thereafter, the Revenue woke up and challenged the said judgement by filing the present appeal.
By order of this Court dated December 3, 2002, they were re framed as Question No.1.
1 to 3 were answered in the affirmative, in favour of the assessee and against the Revenue.
Whether, on the facts and in the circumstances of the case, fifty per cent, out of the assesseee s ten per cent, share in the firm of Messrs. Kinariwala R.J.K. Industries has been validly assigned to Sunil Jivanlal Kinariwala Trust under the deed of trust dated December, 27, 1973, and whether the income arising therefrom belongs to the said trust by way of overriding title?
Against the order of assessment, the assessee appealed before the Appellate Assistant Commissioner of Income Tax who allowed the appeal directing that a sum of Rs.
20, 141/ which stood transferred to the trust under the settlement, be excluded from the total income of the assessee.
There are three beneficiaries of the Trust the assessees brothers wife, assessees niece and the assessees mother.
The High Court, relying on the judgements of this Court in Commissioner of Income tax, Madras v. Bhagyalakshmi and Co. 1965 55 I.T.R. 660 and Murlidhar Himatsingka and Anr.
20, 141 being the profits referable to 50 per cent, out of the assessee s right, title and interest often per cent, in the partnership firm of Messrs. Kinariwala R.J.K. Industries is number the real income of the assessee, but of Sunil Jivanlal Kinariwala Trust and as such assessable only in the hands of the trust?
1899 of 2002 This appeal, by the Revenue, is directed against the judgment of the Division Bench of the High Court of Gujarat in Income Tax Reference No.
In some of those cases, special leave petitions were filed but they were dismissed on the ground that the main judgement of the High Court was allowed to become final.
However, on appeal by the Revenue, the Tribunal reversed the order of the Appellate Assistant Commissioner.
The Income Tax Officer rejected the claim on the view that it was a case of application of income and number diversion of income at source he also found that Section 60 of the Act was attracted as only income without transfer of asset was settled.
The fact which gave rise to these questions may be numbericed here.
On December 27, 1973, he created a Trust named Sunil Jivanlal Kinariwala Trust by a deed of settlement assigning fifty percent out of his ten per cent right, title and interest excluding capital , as a partner in the firm, and a sum of Rupees five thousand out of his capital in the firm in favour of the said Trust.
