2014 (10) TMI 70

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.... Sri J. V. Prasad, Standing Counsel ORDER (Per the Hon'ble Sri Justice L. Narasimha Reddy) This is a petition under Section 256 (2) of the Income Tax Act, 1961 (for short, the Act) filed with a prayer to direct the Hyderabad Bench of the Income Tax Tribunal (for short, the Tribunal) to refer the following questions to this Court for answer: 1. Whether on the facts and in the circum....

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....ner in M/s. Sri Mallikarjuna Textiles, Proddatur. Through a declaration dated 15-04-1981, the petitioner stated that he gifted 50% of the share in the firm M/s. Sri Mallikarjuna Textiles in favour of his wife Subbaratnamma as stridhana property. To that extent, the profits were excluded in the returns. Order of assessment was passed accepting the same. However, the assessing officer reopened the p....

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....r and Sri J.V. Prasad, learned counsel for the respondent. The petitioner no doubt is the Kartha of HUF and the HUF is a partner, in a firm. Declaration dated 10-04-1981 said to have been made by the petitioner in favour of his wife, gifting half of the holding in the firm is also not disputed. However, the controversy is about the legal consequences flowing therefrom. The law maintains a cl....

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.... to none other than his wife. Incidentally, the donee is very much part of the HUF, along with the children. Even if the disposition through the declaration is treated as valid, it did not have the effect of taking any fraction of the share of the HUF in the firm, outside the purview of the HUF. When the entire shareholding in the firm is by the HUF, there was no occasion or basis for further chan....