1982 (9) TMI 76

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....ip was reconstituted by a partnership deed dt. 2nd Nov., 1973 (7th day of Kartik of Samvat Year 2030) and the two daughters-in-law of the assessee, viz., Hafiza Fakruddin and Bilkesh Imdadali, were taken as new partners, each having a share of 15 per cent in the profits of the firm. It is not disputed that the assessee made gifts totalling, in all, to Rs. 25,000 in each case and it is out of this amount gifted that the two daughters-in-law introduced Rs. 24,000 each as capital in the firm M/s Siraj & Co. Later on both the daughters-in-law withdrew the amount of Rs. 24,000 each deposited in the firm and another deed of partnership was executed on 8th Nov., 1975 which was to be effective from 4th Nov., 1975, both dates falling in Samvat Year ....

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....TR 810 (Mad), and concluded that the connection between the transfer of assets and the share income derived by the daughters-in-law was remote and not proximate. Shri Shah also pointed out that the concept in Expln. 3 in s. 64(1) was not specifically made applicable to cl. (vi) of s. 64(1). He also invited attention to one factual aspect which placed the assessee's case on stronger footing than the case of Prem Bhai Parekh viz., there was no requirement of contribution of capital by the partners in the two partnership deeds executed on 2nd Nov., 1973 and 8th Nov., 1975. 4. On behalf of the Revenue, it was contended that the assessee had returned the shares of income of the two daughters-in-law in her return filed for the asst. yr. 1976-7....

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....the three assessment years under appeal. The assessee apparently returned the shares of income of the two daughters-in-law for the asst. yr. 1976-77 because she felt that her case would fall under s. 64 and for no other reasons. When she was given correct legal advice about the provisions of s. 64(1)(vi) she was fully justified in taking a different stand. Once that stand is taken, the issue has to be resolved in the light of the statute and not in accordance with some earlier action on the part of the assessee. 6.2. Next we notice that the ratio of Supreme Court decision in Prem Bhai Parekh's case would apply with full force even in respect of s. 64(1)(vi) of the IT Act, 1961 which uses similar language as was used in the IT Act, 1922 w....