Commissioner of Income Tax vs Satyanarayan Sikaria

In this application u/s 256(2) of the Income Tax Act, 1961, the Revenue has approached this court praying for a direction to the Tribunal to refer the following questions for the .opinion of this court :

"1. Whether, on the facts and in the circumstances of the case and in view of the Commissioner of Income Tax (Appeals) order, the Tribunal is justified in directing the Assessing Officer to allow the claim of annual charge of Rs. 2,10,000 u/s 24(1)(iv) of the income tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in following the order passed by the Assessing Officer earlier which is patently wrong as per Section 171 read with Explanation (a) on the ground that to reopen the issue of partition without altering the order u/s 171 of the Act is outside the jurisdiction of the Assessing Officer ?"

The assessee is an individual. By way of partition in his family where the assessee is a karta, he became the owner of a property and from income of that property he claimed Rs. 2,10,000 to be paid to different erstwhile seven members of the family at the rate of Rs. 30,000 per member per annum. This claim has been made as annual charge u/s 24(1)(iv) of the Act. The Assessing Officer rejected the claim of the assessee in view of the fact that it is a voluntary charge created and not deductible u/s 24 of the Act.

By interpreting the deed of partition, the Tribunal held that the annual charge was not voluntary.

The Revenue being aggrieved made a prayer to the Tribunal to refer the aforesaid questions for opinion of this court. The Tribunal rejected the prayer of the Revenue. Hence, this present petition.

We have heard Mr. G.K. Joshi, learned senior standing counsel for the Revenue and Dr. A.K. Saraf, learned counsel for the assessee.

Mr. Joshi submits that questions of law arc involved inasmuch as the Tribunal arrived at a conclusion by giving a wrong interpretation to the deed of partition. On the other hand, Dr. Saraf has vehemently opposed the prayer. He submits that no question of law is involved. Therefore, this court may not give any direction.

On a perusal of the petition we find that the decision of the Tribunal is based on the interpretation of the deed of partition and Section 24(1)(iv) and Section 171 of the Income Tax Act.

In view of the above, we are of the opinion that a direction should be given to the Tribunal to refer the questions mentioned above for opinion of this court and hence, we direct accordingly.

The petition is disposed of.