1984 (7) TMI 33

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....ther, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that there is no transfer or sale within the meaning of section 34(3)(b) ? " The reference relates to the assessment year 1970-71. The assessee was a Hindu joint family consisting of the " karta " and three major sons. During the accounting year relevant to the assessment year 1970-71, the family purchased new machinery of the value of Rs. 1,38,977 and secured deduction on account of development rebate to the extent of Rs. 48,648. On May 10, 1972, there was a partition of the joint family assets including the business of the family. After the partition, it appears, the four coparceners of the erstwhile joint family constituted themselv....

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....tially allowed, was thrown into the common stock of the partnership consisting of the four coparceners of the erstwhile joint family, there was a transfer and, consequently, there was a violation of the conditions of s. 34(3)(b) of the Act. The Tribunal rejected the contention of the Revenue and held that the partition of property by metes and bounds among the members of the joint family did not involve any transfer of property. The Tribunal did not specifically deal with the contention that there was a transfer of the assets to the partnership firm. The Tribunal dismissed the appeal filed by the Department. The Commissioner of Income-tax applied for a reference under s. 256(1) of the Act and the Tribunal referred the abovementioned questio....

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....he same view that when a partner impresses his individual property with the character of partnership property, there is in law no transfer and much less a sale. It must, therefore, be said that, even when the divided coparceners threw the machinery, which fell to their respective shares, into the common stock of partnership, there is neither a sale nor a transfer within the meaning of s. 34(3)(b) of the Act, and consequently the provisions of s. 155(5) of the Act have no application. There is also another difficulty in accepting the Revenue's contention regarding the application of s. 155(5) of the Act. Before s. 155(5) of the Act could be applied, the transfer or sale has to be effected by the assessee to whom development rebate was ini....