1979 (5) TMI 21 - HC - Income Tax

High Court confirms clarity of shares in AOP for tax purposes, directs legal question to Tribunal

The High Court of GAUHATI determined that the shares of members in an association of persons (AOP) were definite and ascertainable for income tax ... House Property, Partnership Deed, Question Of Law Issues:1. Interpretation of shares in profit of members of an association of persons (AOP) under section 26 of the Income-tax Act, 1961.2. Whether the Tribunal's finding on the definite and ascertainable shares of AOP members is a question of fact or law.Analysis:The judgment by the High Court of GAUHATI dealt with seven Civil Rules involving common questions of fact and law related to assessment orders by the Income Tax Officer (ITO) for different periods. The primary issue revolved around the interpretation of section 26 of the Income-tax Act, 1961, concerning the shares of members of an association of persons (AOP) in the income from house property. The ITO initially assessed the AOP, concluding that the shares were not definite and ascertainable, leading to income tax imposition. However, the Appellate Authority Commissioner (AAC) reversed this decision, determining that the shares were indeed definite and ascertainable based on the evidence. The Income-tax Appellate Tribunal upheld the AAC's findings, emphasizing the clarity of shares within the AOP.The department sought a reference to the High Court on whether the Tribunal's findings were based on fact or law. The Tribunal maintained that the shares' definiteness and ascertainability were factual determinations supported by the evidence. The High Court analyzed that while the factual aspect of shares might be involved, the interpretation of partnership deed clauses and relevant statutory provisions constituted a legal question. Therefore, the High Court directed the Tribunal to refer the question of law regarding the interpretation of partnership deed clauses and section 26 of the Act for the court's consideration.The judgment clarified that the second question raised by the department was encompassed within the first question and was not pressed by the petitioner. Consequently, the applications were allowed, the rules were made absolute, and each party was directed to bear its own costs. Judge D. PATHAK concurred with the decision, leading to the conclusion of the judgment.