HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income Tax, Gujarat v. Ashokbhai Chimanbhai
Civil Appeal No. 817 of 1963
[1965] 1 SCR 758 ·
Indian Income Tax Act, 1922: sections 3 and 4
Sources & disclosures includedDownload original judgment / order
3-judge bench · K. Subba Rao, J. · J. C. Shah, J. · S. M. Sikri, J.
Assessment years: 1955-56
01 · Facts of the case
Ashokbhai represented his HUF as a five-anna partner in Amrit Chemicals. The firm’s accounts were made up each 31 December. A partition deed executed on 12 November 1955 made Ashokbhai individually entitled to the partnership interest and the 1955 profit. Revenue apportioned the annual share between the HUF and Ashokbhai by time, although the accounts were settled after partition.
02 · Discussion by the Hon’ble Court
The Court distinguished profit embedded in daily receipts from accrued income. Profit ordinarily requires comparison at the contractual accounting point, and accrual requires an enforceable right to receive. Under this partnership deed no partner could demand the annual profit before year-end. When the right arose on 31 December, the HUF had already ceased to own the interest. The firm’s non-separate legal personality did not justify attributing an unascertained share to the former HUF.
03 · Judicial decision
The Court dismissed Revenue’s appeal and upheld the negative answer to the reference: none of the five-anna share for calendar year 1955 accrued to or was taxable in the HUF’s hands.
Source: Holding and operative order
04 · Outcome / in whose favour
In favour of the assessee HUF/respondent. The full annual share accrued to Ashokbhai individually after partition.
Source: Operative result
05 · AKHB REVIEW POINT
AKHB analysis: for partnership-profit attribution around a partition, retirement or transfer, inspect the deed, accounting date and point at which an enforceable right to profit arises. Do not equate economic activity during a period with legal accrual to a person who then lacks the right to receive it.
Source & verification
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Statutory scope
The case applies the accrual concept under the 1922 Act to a historical partnership and HUF partition. Current treatment requires the present partnership, HUF and accrual provisions.
Later treatment
Source checked 2026-10-10. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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