Law:

Section:

Section 93 of the Income-tax Act, 1961 - [Corresponding to section 44D of the Indian Income-tax Act, 1922] - Avoidance of income-tax by transaction resulting in transfer of income to non-residents - Assessment years 1939-40 to 1941-42 - The assessees belonged to an erstwhile HUF constituted a firm carried out their traditional business of money lending both in India and outside India later, the assessees constituted a banking corporation outside income and business outside India was taken over by this company - The partners of the firm were allotted shares in the corporation - For the assessment years 1939-40 to 1941-42, the ITO assessed the said partners of the firm separately under section 44D in respect of the income of the corporation - It was found that partners were close relatives i.e., brothers and mother, they owned more than 85% shares of corporation and had controlling voice in management of company - Whether it was to be held that partners were acting in unison throughout and they had power to enjoy income within meaning of section 44D(1) - Held, yes - Whether therefore, income made by company could be assessed under section 44D in hands of assessees - Held, yes FACTS The assessees belonged to an erstwhile HUF constituted a firm carried out their traditional business of money lending both in India and outside India. Later, the assessees constituted a banking corporation outside income and business outside India was taken over by this company. The partners of the firm were allotted shares in the corporation. For the assessment years 1939-40 to 1941-42, the ITO assessed the said partners of the firm separately under section 44D in respect of the income of the corporation. On appeal, the AAC rejected the same. On second appeal, the Tribunal held that the income from the assets transferred to the corporation was not assessable to income tax at the time of the transfer, and that, therefore, the income therefrom was not liable to tax under section 44. On reference, the High Court held that the said income of the corporation was attracted by section 44D, and that the assessees did not satisfy the requirements of sub-section (3)(a) of section 44D. On appeal…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492