S.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the release by the assessee who was one of the partners in the firm of 3- Aces, of his rights in the assets of the firm for a consideration of Rs. 3,00,000 when the market value of the assets of the firm in proportion to his share was in excess thereof, did not amount to a gift within the meaning of the GT Act.

Counsel appeared

A. Subba Rao, for the Appellant : M.L. Verma with S. Rajappa, for the Respondent.

Editorial Comments Similar view has been taken by the Supreme Court where a partner retires from the firm, in the case of CGT vs. T.M. Louiz (2000) 163 CTR (SC) 359. The Supreme Court held that when a partner retires from a partnership, the partnership continues. The assets and the goodwill of the firm continue to remain the assets and the goodwill of the firm. All that the retiring partner gets is the value of his share in the partnership assets less its liabilities. It cannot, in such circumstances, be held, assuming that the retiring partner received less than what was his due, that the difference was something that he had transferred to the continuing partners within the meaning of ‘transfer of property’ for the purposes of the GT Act or that there was a gift liable to gift-tax. The word ‘settlement’ in the definition of ‘transfer of property’ in the GT Act takes colour from the context of the definition and its neighbouring words and means a settlement upon trust and not a settlement of accounts. There is no “transfer of property’ as defined in GT Act in favour of continuing partners or a gift liable to gift-tax when a partner retires from the firm even if the retiring partner receives less than what was his due.

JUDGMENT

SHIVARAJ V. PATIL, J. :

This appeal is by the assessee against the judgment and order dt. 26th April, 1988, passed by the Division Bench of the High Court of Andhra Pradesh. It relates to the asst. yr. 1972-73. The Income-tax Appellate Tribunal, Hyderabad (for short the ‘Tribunal’), had referred the following question under 26(1) of the GT Act, 1958 (for short the ‘Act’), for the opinion of the High Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the release by the assessee who was one of the partners in the firm of 3- Aces, of his rights in the assets of the firm for a consideration of Rs. 3,00,000 when the market value of the assets of the firm in proportion to his share was in excess thereof, did not amount to a gift within the meaning of the GT Act.” The High Court by the impugned judgment answered the said question in negative and against the assessee.

2. Briefly stated, the facts leading to the filing of this appeal are as follows. The appellant and his brotherBishanlal Ahuja were the partners of a partnership firm constituted on 9th Jan., 1965, under the name and style of “3-Aces”. The firm was engaged in the business of a restaurant in a building known as “Mohsin-ul-Mulk Kothi” situated at Abid Road, Hyderabad. An agreement was entered into between the appellant and his brother Bishanlal on 15th April, 1971. The terms of the said agreement are set out below ; “(i) Sri Jagatram (assessee) is to retire before 31st Dec., 1971. (ii) Steps are to be taken to finalise accounts relating to the partnership and determination of amount due to Sri Jagatram on retirement. (iii) Sri Bishanlal agreed to pay a sum of Rs. 1,50,000 to Sri Jagatram towards the value of 50 per cent share of the goodwill of the firm. (iv) The above sum of Rs. 1,50,000 payable by Sri Bishanlal to Sri Jagatram shall be in addition to the sum due to Sri Jagatram from the partnership at the time of retirement. (v) If the total sum including 50 per cent share value of the goodwill, i.e., Rs. 1,50,000, payable to Sri Jagatram falls below Rs. 3,00,000, the amount in excess of the balance actually due to Sri Jagatram at the time of retirement shall be treated as the sale value of 50 per cent share of the goodwill belonging to Sri Jagatram. (vi) Shri Jagatram shall execute proper conveyance in favour of Shri Bishanlal conveying 50 per cent share in the land and building in which the business of 3-Aces is carried on. (vii) It is open to Sri Bishanlal to classify the sum payable to Sri Jagatram as between movable and immovable properties and get necessary documents executed by Sri Jagatram.” Pursuant to the said agreement, a deed of dissolution of the partnership was executed on 22nd Nov., 1971, with effect from that date. The relevant terms contained in the deed of dissolution are given below : “(i) All the assets and liabilities of the partnership including the land and building are taken by Sri Bishanlal from 22nd Nov., 1971. (ii) Sri Jagatram renounced his interest, share and interest in the said assets and liabilities from 22nd Nov., 1971. (iii) In full settlement and satisfaction of the share, right and interest of Sri Jagatram in the partnership including land and buildings, profits and goodwill and the amounts standing to the credit of Sri Jagatram in the partnership accounts as on 21st Nov., 1971, Sri Jagatram has agreed to receive Rs. 3,00,000. (iv) Out of the said Rs. 3,00,000, Rs. 1,00,000 has already been paid. The balance of Rs. 2,00,000 is payable by Shri Bishanlal against the sale consideration of the undivided 50 per cent share in the land and building known as “Mohsin-ul-Mulk Kothi”. (v) Sri Jagatram should immediately execute a sale deed and register the same in favour of Sri Bishanlal conveying his 50 per cent share in the land and building for Rs. 2,00,000.”

It was on 10th March, 1972, that the appellant and Bishanlal executed a document styled as “Release Deed’ pursuant to and consistent with the aforementioned two documents. Originally assessment of gift-tax was made on 12th Feb., 1972, on a total gift of Rs. 70,000. After allowing exemption of Rs. 5,000 it was determined at Rs. 65,000. Subsequently, the GTO took up the proceedings under s. 16 of the Act, 1958, by reopening the assessment already made. He valued that share of the appellant in the partnership assets at Rs. 12,67,015. An amount of Rs. 3,00,000 paid by Bishanlal to the appellant was deducted and thus the value of the property alleged to have been gifted by the appellant to his brother Bishanlal was arrived at Rs. 9,67,015. On appeal by the appellant, the CGT(A) confirmed the order of the GTO. However, he reduced the total value of the gift by Rs. 3,77,000. The appellant took up the matter in further appeal before the Tribunal. The Tribunal accepted the appeal holding that the distribution of assets between partners on the dissolution of the firm, even though unequal, does not amount to “transfer of property” within the meaning of s. 2(xxiv) and, therefore, did not amount to “gift” as defined in s. 2(xii) of the Act.

3. At the instance of the Revenue, the Tribunal referred the above stated question under s. 26(1) of the Act for the opinion of the High Court. The High Court referring to the various decisions and for the reasons stated in the impugned judgment took the view in favour of the Revenue. In doing so, the High Court relied on CGT vs. Chhotalal Mohanlal (1987) 61 CTR (SC) 263 : (1987) 166 ITR 124 (SC) : TC 35R.551, M.K. Kuppuraj vs. CGT (1984) 38 CTR (Mad) 314 : (1985) 153 ITR 481 (Mad) : TC 35R.556 and CGT vs. Premji Trikamji Jobanputra (1982) 133 ITR 317 (Bom) : TC 35R.532 distinguishing the other cases, particularly the case of CGT vs. N.S. Getti Chettiar 1972 CTR (SC) 349 : (1971) 82 ITR 599 (SC) : TC 35R.730 strongly relied on in support of the case of the appellant. At the outset, the learned counsel for the appellant submitted that the appellant is not challenging the valuation of property of alleged gift. Hence, it is unnecessary for us to go into that question. The learned counsel for the appellant seriously contended that the High Court manifestly erred in answering the question in favour of the Revenue contrary to the ratio and principles stated in the case of Getti Chettiar (supra). He further submitted that the decisions relied on by the High Court in support of its conclusion were not directly on the point and some of them arose under the ED Act. Per contra, the learned senior counsel for the respondent argued supporting the view taken by the High Court. We have carefully considered the submissions made by the learned counsel for the parties. In order to appreciate the respective contentions of the parties and to resolve the controversy we consider it appropriate to extract definitions of “Gift” and “Transfer of property” from s. 2 of the Act : “2 (xii) “gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money’s worth, and includes the transfer or conversion of any property referred to in s. 4, deemed to be a gift under that section; Explanation : A transfer of any building or part thereof referred to in cl. (iii), cl.(iiia) or cl. (iiib) of s. 27 of the IT Act, by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money’s worth, shall be deemed to be a gift made by such person.” “2 (xxiv) “transfer of property” means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes: (a) the creation of a trust in property; (b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property; (c) the exercise of a power of appointment (whether general, special or subject to any restrictions as to the persons in whose favour the appointment may be made) of property vested in any person; not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person;”

7. This Court in CGT vs. N.S. Getti Chettiar (supra), arising under the Act itself construing and considering the very same provisions held that in a Hindu Joint Family by allotting greater share to other members of coparcenary than that to which they were entitled, the assessee could not be held to have made a gift. Facts of the case were that the assessee was the Karta of HUF consisting of himself, his son and his six grandsons. There was a partition in the family property. The total value of the properties divided was Rs. 8,51,440 but the assessee, the Karta took properties worth only Rs. 1,78,343 allotting the remaining properties to other coparceners. After considering various decisions and provisions of law, this Court arrived at the following conclusions : (i) That the partition did not effect any transfer as generally understood in law and did not, therefore, fall within the definition of gift in s. 2(xii) of the Act. (ii) That the partition in the family could not be considered to be a disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property within the meaning of those words in s. 2(xxiv) of the Act. (iii) That the partition was not a transaction entered into by the assessee with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person and, therefore, s. 2(xxiv)(d) did not apply. (iv) That, therefore, there was no gift by the assessee of which he was liable to pay gift-tax. On the reason that a member of HUF has no definite share in the family property before the division and he cannot be said to diminish directly or indirectly the value of his property or to increase the value of the property of any other coparcener by agreeing to take a share lesser than what he would have got if he would have gone to a Court to enforce his claim.

The word ‘transaction’ in cl. (d) of s. 2(xxiv) takes its colour from the main clause; it must be a transfer of property in some way. The words disposition, conveyance, assignment, settlement, delivery and payment are all used to indicate some kind of transfer of property. An interpretation clause which extends the meaning of a word does not take away its ordinary and popular meaning. It is settled position in law that a partition of HUF cannot be considered as a transfer in the strict sense. In CIT vs. Keshavlal Lallubhai Patel (1965) 2 SCR 100 : (1965) 55 ITR 637 (SC) : TC 42R.719 this Court stated thus : “But, is a partition of joint Hindu family property a transfer in the strict sense ? We are of the opinion that it is not. This was so held in Gutta Radhakrishnayya vs. Gutta Sarasamma ILR 1951 Mad 607. Subba Rao, J. (then a Judge of the Madras High Court), after examining several authorities, came to the conclusion that ‘partition’ is really a process in and by which a joint enjoyment is transformed into an enjoyment in severalty. Each one of the shares had an antecedent title and, therefore, no conveyance is involved in the process, as a conferment of a new title is not necessary’. The Madras High Court again examined the question in M.K. Stremann vs. CIT (1961) 41 ITR 297 (Mad) : TC 42R.978 with reference to s. 16(3)(a)(iv). It observed that ‘obviously no question of transfer of assets can arise when all that happens is separation in status, though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter by the separated members as tenants-in-common. Subsequent partition between the divided members of the family does not amount either to a transfer of assets from that body of the tenants-in-common to each of such tenants-in- common’.” This Court in Getti Chettiar case aforementioned has stated thus : “A reading of this section clearly goes to show that the words ‘disposition’, ‘conveyance’ ‘assignment’, ‘settlement’, ‘delivery’ and ‘payment’ are used as some of the modes of transfer of property. The dictionary gives various meanings for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used. Words in a section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are intended to serve. If so understood, it is clear that the word ‘disposition’ in the context means giving away or giving up by a person of something which was his own, ‘conveyance’ means transfer of ownership, ‘assignment’ means the transfer of the claim, right or property to another, ‘settlement’ means settling the property, right or claim conveyance or disposition of property for the benefit of another, ‘delivery’ contemplated therein is the delivery of one’s property to another for no consideration and ‘payment’ implies gift of money by someone to another. We do not think that a partition in an HUF can be considered either as ‘disposition’ or ‘conveyance’ or ‘assignment’ or ‘settlement’ or ‘delivery’ or ‘payment’ or ‘alienation’ within the meaning of those words in s. 2 (xxiv).

This leaves us with cl. (d) of s. 2 (xxiv) which speaks of a transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of another person. A member of HUF who, as mentioned earlier, has no definite share in the family property before division, cannot be said to diminish directly or indirectly the value of his property or to increase the value of the property of any other coparcener by agreeing to take a share lesser than what he would have got if he had gone to Court to enforce his claim. Till partition, his share in the family property is indeterminate. He becomes entitled to a share in the family property only after the partition. Therefore, there is no question of his either diminishing directly or indirectly the value of his own property or of increasing the value of the property of anyone else. The ‘transaction’ referred to in cl. (d) of s. 2(xxiv) takes its colour from the main clause viz., it must be a transfer of property in some way. This conclusion of ours gets support from sub-cl. (a) to (c) of cl. (xxiv) of s.2, each of which deals with one or the other mode of transfer. If Parliament intended to bring within the scope of that provision partitions of the type with which we are concerned, nothing was easier than to say so. In interpreting tax laws, Courts merely look at the words of the section. If a case clearly comes within the section, the subject is taxed and not otherwise.”

10. This Court again in Addanki Narayanappa & Anr. vs. Bhaskara Krishnappa AIR 1966 SC 1300, considering the provisions of ss. 14, 15, 29, 32, 37, 38 and 48 of Partnership Act, 1932, has explained as to the nature of property during subsistence of partnership and after its dissolution. It is held that “from a perusal of these provisions it would be abundantly clear that whatever may be the character of the property which is brought in by the partners, when the partnership is formed or which may be acquired in the course of the business of the partnership it becomes the property of the firm and what a partner is entitled to is his share of profits, if any, accruing to the partnership from the realization of this property, and upon dissolution of the partnership to a share in the money representing the value of the property. No doubt, since a firm has no legal existence, the partnership property will vest in all the partners and in that sense every partner has an interest in the property of the partnership. During the subsistence of the partnership, however, no partner can deal with any portion of the property as his own. Nor can he assign his interest in a specific item of the partnership property to anyone. His right is to obtain such profits, if any, as fall to his share from time to time, and upon the dissolution of the firm to a share in the assets of the firm which remain after satisfying the liabilities set out in cl. (a) and sub-cls. (i), (ii) and (iii) of cl. (b) of s. 48.” In Malabar Fisheries Co. vs. CIT (1979) 12 CTR (SC) 415 : (1979) 120 ITR 49 (SC) : TC

28R.572 this Court considered few provisions of IT Act, 1961. Referring to the case of Addanki Narayanappa (supra) and other cases expressed the view that a partnership firm under the Indian Partnership Act is not a distinct legal entity apart from the partners constituting it and that in law the firm as such has no separate rights of its own. When one talks of the property or assets of the firm all that is meant is property or assets in which all partners have a joint or common interest. Hence, the contention that upon dissolution of the firm rights in the partnership assets are extinguished, cannot be accepted. It is further, held that the partners own jointly or in common theassets of the partnership and, therefore, the consequence of the distribution, division or allotment of assets to the partners which flows upon dissolution after discharge of liabilities is nothing but a mutual adjustment of rights between the partners and there is no question of any extinguishment of the firm’s rights in the partnership assets amounting to a transfer of assets within the meaning of s. 2(47) of the IT Act, 1961.

Although the case arose under the provisions of IT Act, but as to the nature and character of transaction of mutual adjustment of rights between the partners upon dissolution of a firm, it was clearly held that such a transaction did not amount to transfer. If there is a sale or transfer of assets by the assessee to a person, the position would be different. Since a partner in a firm has no exclusive right on any property of the firm he cannot transfer the property. But upon the dissolution of a firm allotment or adjustment of the assets takes place. Hence, there was no element of transfer in such a case. Yet, in another case CIT vs. Dewas Cine Corporation (1968) 68 ITR 240 (SC), dealing with the provisions of s. 10(2)(vii) of IT Act, again referring to Adanki Narayanappa’s case (supra) this Court took the view that a partner might in an action for dissolution insist to sell the assets of partnership to realize his share. But where in satisfaction of the claim of a partner to his share in the value of the residue determined on the footing of an actual or notional sale, the properties so allotted cannot be taken to have been sold to him.

13. On principles and in view of the clear ratio, the decision of Getti Chettiar (supra) of this Court supported the case of the appellant which decision was rightly applied by the Tribunal to the facts of the case. The High Court in relation to the said decision has stated thus : “Be that as it may, it is not for us to express any opinion on the said criticism. By virtue of Art. 141 of the Constitution, the said decision and even the observations aforesaid are binding upon us. In our opinion, however, the ratio of the said decision has no application to the distribution of assets as between partners whose shares inter se are specific and determined at any given point of time. Moreover, this decision has to be read and understood in the light of the subsequent decision of the Supreme Court in CED vs. Kantilal Trikamlal 1976 CTR (SC) 391 : (1976) 105 ITR 92 (SC), which is, no doubt, a case arising under the ED Act. Sec. 2(15) of the ED Act, defines “property” in the following terms.” The High Court having rightly stated that the said decision and even the observations made were binding on it wrongly did not apply the ratio of the said decision to the facts of the case in hand. Further, the High Court committed an error in stating that the said decision had no application to the distribution of the assets as between the partners whose shares inter se are specific and determined at any given point of time and that the said decision had to be read and understood in the light of the subsequent decision of this Court in Kantilal Trikamlal’s case (supra). As in the case of Hindu joint family, the coparceners do not have exclusive rights on any specific property of the family, the property allotted to their shares become specified only on partition; the same is the position in the case of partner of a firm. No partner of a firm can claim exclusive or specific right in any specific asset of the property of a firm. Coparceners also have definite share in the HUF. So also the partners have definite share in the partnership. In our considered view, the principles stated in Getti Chettiar’s case (supra) equally apply to case of allotment or adjustment of properties among the partners upon dissolution of a firm. We fail to understand how Kantilal Trikamlal’s (supra) case made any difference. The said case did not show any disagreement with the principles stated in Getti Chetiar’s case and no distinction was made to take a different view. On the other hand, principles stated in Getti Chettiar’s case (supra) were affirmed. In relation to Getti Chettiar’s case (supra), in Kantilal Trikamlal (supra), it is stated thus : “That a case under the GT Act, 1958, and the construction of s. 2(xxiv) fell for decision. Certainly, many of the observations there, read de hors the particular statute, might reinforce the assessee’s stand. This Court interpreted the expression “transfer of property” in s. 2(xxiv) and held that the expression “disposition” used in that provision should be read in the context and setting of the given statute. The very fact that “disposition” is treated as a mode of transfer takes the legal concept along a different street, if one may use such a phrase, from the one along which that word in the ED Act is travelling. Mr. Justice Hegde rightly observed, if we may say so with respect, that :

‘Words in the section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms are used and the purpose that they are intended to serve.’ (pp. 605-606).

The word “transaction” in s. 2(24) of the GT Act takes its colour from the main clause, that is, it must be a “transfer” of property in some way. Since a partition is not a “transfer” in the ordinary sense of law, the Court reached the conclusion that a mere partition with unequal allotments not being a transfer, cannot be covered by s. 2(xxiv). A close reading of that provision and the judgment will dissolve the mist of misunderstanding and discloses the danger of reading observations from that case for application in the instant case. The language of s. 2(15), Expln. 2, is different and wider and the reasoning of Getti Chettiar cannot therefore, control its amplitude. It is perfectly true that in ordinary Hindu law a partition involves no conveyance and no question of transfer arises when all that happens is a severance in status and the common holding of property by the coparcener is converted into separate title of each coparcener as tenant-in-common. Nor does subsequent partition by metes and bounds amount to a transfer. The controlling distinction consists in the difference in definition between the GT Act s. (xxiv) and the ED Act s. (15).” We find that Kantilal Trikamlal’s case (supra) supports the view taken in Getti Chettiar’s case (supra). Added to this, s. 2(15) of the ED Act, defining “property” came up for consideration in Kantilal Trikamlal’s case. We may state here itself that the words and expressions defined in one statute as judicially interpreted do not afford a guide to construction of the same words or expressions in another statute unless both the statutes are pari materia legislations or it is specifically so provided in one statute to give the same meaning to the words as defined in other statute. The aim and object of the two legislations, namely, the GT Act and the ED Act are not similar.

14. In CIT vs. Bankey Lal Vaidya (1971) 79 ITR 594 (SC) : TC 20R.874, it is clearly stated that where in the course of dissolution, the assets of the firm are divided between the partners according to the respective shares, by allotting the individual assets or paying the money value equivalent thereof, no transfer is involved and that it is merely a case of distribution of assets. The same view is taken in Addl. CIT vs. Mohanbhai Pamabhai (1987) 165 ITR 166 (SC) : TC 20R.865 that where a partner retires from a firm and receives his share of amount calculated on the valuation of the net partnership assets including goodwill of the firm, no transfer is involved.

15. We now refer to the cases relied on by the High Court to support its view. In CGT vs. Chhotalal Mohanlal (supra), this Court reversed the decision of Gujarat High Court reported as CGT vs. Chhotalal Mohanlal (1974) 97 ITR 393 (Guj) : TC 35R.554 and in the light of the facts and circumstances of the case, held that there was a gift for the purpose of the GT Act. In that case, a firm by name M/s Chhotalal Mohanlal came into existence with three partners namely, Chhotalal Mohanlal, G. Chhotalal and P. Vedilal with 7 annas, 4 annas and 5 annas shares, respectively. During the asst. yr. 1963-64, under the new deed, P. Vedilal retired. The share of G. Chhotalal remained unchanged. One R. Chhotalal became a partner with 4 annas share. The share of assessee Chhotalal Mohanlal was reduced to 4 annas. For the remaining 4 annas share, 2 minor sons of Chhotalal Mohanlal were admitted to the benefits of the firm with 12 per cent and 13 per cent interest, respectively. There was also no change in the share capital standing in the name of the assessee. As can be seen from the facts stated above, P. Vedilal retired and the firm was reconstituted; two minor sons of Chhotalal Mohanlal, one of the partners, were admitted to the benefits of the partnership and simultaneously share of said Chhotalal Mohanlal was reduced from 7 annas to 4 annas giving 3 annas share to the minor sons. In this situation when at the time of the reconstitution of the firm, a 3 annas share out of Chhotalal Mohanlal’s 7 annas share in the partnership firm was given to his minor sons it was taken as transfer of property by way of gift and as such it was taxable. Hence, the case of Chottalal Mohanlal (supra) did not advance the case of the Revenue on the facts of the case before us.

16. The case of M.K. Kuppuraj (supra) was also a case where the assessee’s share was reduced and his minor children were admitted to the benefits of the partnership with 8 per cent share in the profits and this case was referred to and approved by this Court in Chottalal Mohanlal’s case. The case of Premji Trikamji (supra) is again a case where in the constitution of a firm, minors were admitted to the benefits of the partnership firm. In all these cases, minors were admitted to the benefits of the partnership and if such partner or minor did not bring in capital of his own into the partnership firm corresponding to his share, it was held that the transaction amounted to a gift. But the present case stands entirely on a different footing. It is clearly and merely a case of adjustment or distribution of assets of the firm in regard to share of the appellant on its dissolution and as such no transfer of property was involved in it. Thus, in our view, the High Court was not right in applying the decisions in (1) Chhotalal Mohanlal (supra), (2) M.K. Kuppuraj (supra), (3) Premji Trikamji (supra) to the facts of the case in hand. The cases of this Court in (1) Getti Chettair (supra), (2) Malabar Fisheries Co. (supra), (3) Dewas Cine Corporation (supra), (4) Bankey Lal Vaidya (supra) and (5) Mohanbhai Pamabhai (supra) aforementioned fully support the appellant on facts and in the circumstances of the case. Having regard to all aspects and for the reasons stated above, we conclude that the High Court committed an error in answering the question in negative i.e., in favour of the Revenue and against the assessee-appellant. Hence, this appeal is entitled to succeed. The judgment and order of the High Court reported in CIT vs. Jagat Ram Ahuja (1988) 73 CTR (AP) 112 : (1988) 172 ITR 632 (AP) : TC 35R.485 are set aside, upholding the order of the Tribunal. The question aforementioned is answered in the affirmative i.e., against the Revenue and in favour of the assessee-appellant. The appeal is ordered accordingly. No costs.

[Citation : 246 ITR 609]