Law:

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Section 4 of the Income-tax Act, 1961 - Individual - Assessable as - Assessment year 1964-65 - Assessee became partners in firm by investing certain sum which he inherited from estate of his deceased father after partition of HUF - Tribunal held that capital invested by assessee was his separate property and hence loss accruing to him being member of firm was his personal loss and not loss of HUF - Whether order of Tribunal was correct - Held, yes FACTS The partition took place in the family of which the assessee was a member. The assessee's father died thereafter. Subsequently, the assessee became a partner of a firm by investing a sum which the assessee took from the estate of his deceased father. The Tribunal held that the sum invested by the assessee was his separate property and that, therefore, the loss which accrued as a result of his membership in the partnership of that firm was also his personal loss and was not be loss of the HUF. On reference : HELD The Allahabad High Court has held in CIT v. Ram Rakshpal Ashok Kumar [1968] 67 ITR 164 , that in view of the provisions of the Hindu Succession Act, 1956, the property inherited by the son from his father, from whom he has separated, is his individual property and cannot be assessed as the income of the HUF of himself and his son. No decision of any court taking a contrary view had been brought to notice. Under these circumstances, in view of the above decision, it would follow that the conclusion of the Tribunal was correct. Note : The case was decided in favour of the assessee. CASES REFERRED TO CIT v. Ram Rakshpal Ashok Kumar [1968] 67 ITR 164 (All.) and Ghasiram Agarwalla v. CGT [1968] 69 ITR 235 (Assam). JUDGMENT Ismail, J.-The Income-tax Appellate Tribunal, Madras Bench, under section 256(1) of the Income-tax Act, 1961, at the instance of the Additional Commissioner of Income-tax, Madras-II, has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee's share in the partnership firm of M/s. Erode Service constituted his separate and individual property and not the property…

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