Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu undivided family - Assessable as - Assessment year 1969-70 - During earlier assessment years, Tribunal had held that income from business of a trading company was includible in hands of assessee - HUF - However, High Court, subsequently, held that there was no justification for conclusion that business of trading company belonged to assessee-HUF, and therefore, clubbing income of trading company during relevant period with that of assessee was not justified - Whether in view of aforesaid finding of High Court, Tribunal was not justified in holding that income earned in relevant assessment year by trading company was includible in hands of assessee - HUF - Held, yes FACTS The assessee was a HUF. The Tribunal following its decision relating to some earlier assessment years came to conclusion that income earned during the relevant period by a trading company was includible in the hands of the assessee. On reference: HELD The Division Bench in the case of assessee itself in Prahlad Maliram v. CIT [1987] 166 ITR 149 (Raj.) held that there was no justification for the conclusion that the business of the trading company belonged to the assessee-HUF and, consequently, clubbing the income of trading company during the relevant period with that of the assessee was not justified. Therefore, the view taken by the Tribunal after the aforesaid decision of the High Court could not be sustained. Consequently, the Tribunal was not justified in holding that income earned in the previous year relevant to the assessment year 1969-70 by trading Company was includible in the hands of the assessee-HUF. Note: The decision was in favour of the assessee. CASE REFERRED TO Prahlad Maliram v. CIT [1987] 166 ITR 149 (Raj.) Chandra Behari for the Applicant. JUDGMENT This reference under section 256(1) of the Income-tax Act, 1961, at the instance of the assessee is to decide the following question of law, namely: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that income earned in the previous year relevant to the assessment year 1969-70 by Temani Trading Company was includible in the hands of…

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