R. C. MANKAD, J. ( 1 ) THE Income-tax Appellate Tribunal has at the instance of the Commissioner of Income-tax Gujarat-I Ahmedabad referred the following question under section 256 (1) of the Income-tax Act 1961 (hereinafter referred to as the Act) for our opinion :- Whether on the facts and circumstances of the case the Appellate Tribunal was right in law in holding that an Individuals interest in a partnership firm and his right to share profit/losses in the firm could be validly thrown into the hotchpot of the H. U. F. of which the said Individual was the Karta? ( 2 ) ASSESSEE Keshavlal Prabhudas Shah had two sources of income. He had a share in partnership firms including a partnership firm running in the name and style of M/s. Bharat Oil Mill (hereinafter referred to as the firm ). He had also a property from which he derived income. The assessee held shares in Narhari Marine Insurance Company Limited (hereinafter referred to as the Company); but there is nothing on record to indicate that the assessee derived any income by way of dividends from his snares in the said Company. The above properties were self-acquired properties of the assessee and until the Assessment Year 1971-72 the assessee was assessed as an individual in respect of the income therefrom. The year of account of the assessee was Samvat Year. On October 17 1970 i. e. about 13 days before the end of Samvat Year 2026 which ended on October 30 1970 the assessee made a declaration before the Taluka Magistrate Bulsar throwing his share in the partnership firm of M/s. Bharat Oil Mill including capital investment of Rs. 48 483 in the said firm and the shares held by him in the Company in the hotchpot of the Hindu Undivided Family consisting of himself his wife his two sons and three grand sons. In other words he impressed his share in the firm and the shares in the Company with the character of Hindu Undivided Family (herein after referred to as H. U. F.) property. In his declaration the assessee stated I hereby impress my right title and interest on the aforesaid partnership property and the shares and on my income thereof with the character of Joint Hindu Undivided Family with the intention that the said property shall hereafter belong to the aforesaid Joint Hindu Undivided Family. In his declaration the assessee stated I hereby impress my right title and interest on the aforesaid partnership property and the shares and on my income thereof with the character of Joint Hindu Undivided Family with the intention that the said property shall hereafter belong to the aforesaid Joint Hindu Undivided Family. Further I state that thereafter I have no individual interest of any kind whatsoever on the aforesaid property save as a Karta of the H. U. F. ( 3 ) IN the course of the assessment proceedings for the Assessment Years 1971-72 and 1972-73 relevant previous years being Samvat Years 2026 and 2027 respectively the assessee claimed that in view of the declaration made by him as stated above the share income from the firm was not includible in his total income inasmuch as this income belonged to his H. U. F. the income-tax Officer accepted the declaration made by the assessee before the Taluka Magistrate to be genuine and acted upon it. In other words he accepted the contention of the assessee that the share income from the firm belonged to his H. U. F. He however include three fifths of the assessees and one fifth share of the assessees wife i. e. in all two fifths share of she income derived from the firm in the total income of the assessee under section 64 (2) of the Act. He did not include three fifths of the assessees include three fifths of the assessees total income on the ground that this share income was impressed with the character of H. U. F. property by the assessees declaration referred to above. As a result of the finding recorded by the Income tax Officer Rs. 2 836 and Rs. 400/- out of the income derived from the firm were included in the assessees total income for the Assess ment Years 1971-72 and 1972 respectively. ( 4 ) ON examining the records or the assessment proceedings in the assessees case for the Assessment Years 1971 -72 and 1972-73 the Commissioner of Income-tax was of the view that the Income-tax Officer had wrongly excluded three-fifths of the assessees income from the firm from the assessees total income while making assessments. ( 4 ) ON examining the records or the assessment proceedings in the assessees case for the Assessment Years 1971 -72 and 1972-73 the Commissioner of Income-tax was of the view that the Income-tax Officer had wrongly excluded three-fifths of the assessees income from the firm from the assessees total income while making assessments. In the opinion of the Commissioner the assessees income from the firm could not be impressed with the character of the H. U. F. property inasmuch as there was risk of liability being saddled on the H. U. F. in case the firm suffered losses. Therefore according to the Commissioner the declaration dated October 17 1970 made by the assessee to the extent it purported to impress his share in the firm with the character of H. U. F. property was not valid in Saw and consequently ineffective. The Commissioner therefore proposed to direct the Income-tax Officer to ignore the said declaration and to include full share of income from the firm in the assessees total income for the Assessment Years under consideration. Consequently the Commissioner issued a notice calling upon the assessee to show cause why the action proposed should not be taken. The assessee resisted the proposed action contending inter alia that the declaration made by him was not invalid or ineffective. It was contended that the action taken by the Income-tax Officer in excluding three-fifths of the share income from the firm from the assessees total income for the Assessment Years in question was in accordance with law. The Commissioner however rejected the contention of the assessee and held that the declaration dated October 17 1970 made by the assessee is invalid and inoperative inasmuch as it was likely to saddle the H. U. F. with the liability in case the firm suffered losses. In the result the Commissioner directed the Income-tax Officer to ignore the declaration and include full share from the firm in the total income of the assessee for the aforesaid Assessment Years. ( 5 ) BEING aggrieved by the order passed by the Commissioner the assessee carried the matter in appeal to the Income-tax Appellate Tribunal. In the result the Commissioner directed the Income-tax Officer to ignore the declaration and include full share from the firm in the total income of the assessee for the aforesaid Assessment Years. ( 5 ) BEING aggrieved by the order passed by the Commissioner the assessee carried the matter in appeal to the Income-tax Appellate Tribunal. The Tribunal did not agree with the view taken by the Commissioner and held that the declaration made by the assessee on October 17 1973 could not be said to be detrimental to the interest of the H. U. F. it was held to the effect that the assessee could have impressed his share in the firm with the character of H. U. F. property and therefore the declaration made by him was valid. In the result the Tribunal allowed the appeal of the assessee and set aside the order of the Commissioner. ( 6 ) IT is contended on behalf of the Revenue that possibility of the firm suffering losses could not be ruled out and in such an eventuality if the declaration made by the assessee was held to be valid the H. U. F. of the assessee would be saddled with the liability of sharing such losses. It was contended that though the assessee could have conferred benefit on the H. U. F. by transferring his property to it or by impressing his property with the character of H. U. F. property he could not have saddled his H. U. F. with the liability. Risk of sharing losses of the firm was by itself sufficient to render the declaration made by the assessee on October 17 1970 invalid. We do not find any substance in this argument advanced on behalf of the Revenue. It is not disputed and indeed it cannot be that the share in a partnership firm is an asset. It was not shown that there were outstanding debts or losses which in reality meant that it was a debt which was being impressed with the character of H. U. F. and not assets. Now a share in a partnership firm having assets is property. In other words the share which the assessee had in the firm was one of the properties held by him. This property admittedly was self-acquired property of the assessee. Now a share in a partnership firm having assets is property. In other words the share which the assessee had in the firm was one of the properties held by him. This property admittedly was self-acquired property of the assessee. It is open to a co-parcener or a member of the H. U. F. to impress his self-acquired property with the character of H. U. F. property. The share in the firm being one of the self-acquired properties of the assessee he could certainly have impressed it with the character of H. U. F. property if he chose to do so. There is no legal bar or impediment and none is pointed out to us against conversion of share in a partnership firm into H. U. F. property. There was therefore nothing to prevent the assessee from impressing his share in the firm with the character of H. U. F. property. A mere risk or possibility of the firm suffering losses in the future will not and cannot convert the share in the firm from asset to liability. The entire approach of the Commissioner was erroneous and the conclusion reached by him has no basis in law It is not in dispute that the declaration made by the assessee on October 17 1970 was genuine. The only ground on which it was held to be invalid by the Commissioner was that a risk of sharing future losses of the firm was involved. As already observed above we are not impressed with the reasoning and approach of the Commissioner. Mr. N. U. Raval learned Advocate appearing for the Revenue has not been able to point out as to why the share in a partnership firm which he could not deny was an asset could not be impressed with the character of H. U. F. property. ( 7 ) MR. Raval made an attempt to support the view taken by the Commissioner on an entirely new ground which was not even urged before the Tribunal. It was contended that the assessee had entered into a contract with other partners of the firm to constitute partnership in his individual capacity and therefore notwithstanding the declaration made by him he would continue to be partner in the firm in his individual capacity. It was contended that the assessee had entered into a contract with other partners of the firm to constitute partnership in his individual capacity and therefore notwithstanding the declaration made by him he would continue to be partner in the firm in his individual capacity. The share income which he received in the previous years relevant to the Assessment Years under consideration and which he would receive in future would be received by him in his individual capacity. Mr. Raval contended that the only consequence which would flow from the declaration made by the assessee was that the income which the assessee received from the firm in his individual capacity would ultimately go to the hands of the H. U. F. Mr. Raval submitted that this was a clear case of application of in come after it was received by the assessee in his individual capacity. Receipt of the income by the assessee from the firm being in his individual capacity. it was liable to be assessed to income-tax in the hands of the assessee. The Commissioner also did not direct the Income-tax Officer to include the entire share income from the firm in the total income of the assessee on the above ground. However we do not find any substance in the contention of Mr. Raval on merits also. Once the declaration was made by the assessee on October 17 1970 and the declaration was accepted as a genuine one the asset and interest held by the assessee in the partnership became the asset and interest of the H. U. F. the assessee becoming a partner representing the H. U. F. for the purposes of assessment of income-tax. In other words he was a partner in the firm for and on behalf of the H. U. F. It is true that qua other partners of the firm the assessee would be answerable in his individual capacity. However once his share in the partnership firm became the property of the H. U. F. it would be his H. U. F. alone which would be entitled to receive income from the firm. The assessee after the declaration would receive the share income from the firm for and on behalf of his H. U. F. We are therefore unable to agree with Mr. The assessee after the declaration would receive the share income from the firm for and on behalf of his H. U. F. We are therefore unable to agree with Mr. Raval that the income which the assessee received during the assessment years under consideration and which he would receive in future was received by him and would be received by him in his individual capacity. It is not a case of application of income after its receipt as urged by Mr. Raval. We therefore reject the the above contention of Mr. Raval. ( 8 ) BEFORE parting with the matter we would like to point out that an important aspect has been overlooked by the Income-tax Officer while making assessment for the Assessment Year 1971 As pointed out above the assessee made declaration throwing his share in the firm in the hotchpot of the H. U. F. on October 17 1970 only 13 days before the close of the accounting year. The question which arises is whether the share of the assessee in the income of the firm earned upto October 17 1970 could be said to belong to the H. U. F. The Income-tax Officer has proceeded to make assessment on the basis or assumption that assessees share in the entire income of the firm for the year of account relevant to the Assessment Year 1971-72 belonged to the H. U. F. and it is on that basis that he added only 2/5ths share in the income derived from the firm in the assessees income-tax assessment for the Assessment Year 1971 The Income-tax Officer did not apply his mind to the question whether or not the assessees share in the income earned by the firm upto October 17 1970 could be included in his assessment for the Assessment Year 1971-72. The earnings made by him till then were past profits which had already accrued and there was no question of impressing the past profits with the character of H. U. F. with retrospective effect so as to render the same immune from his personal tax liability by creating a fiction. The earnings made by him till then were past profits which had already accrued and there was no question of impressing the past profits with the character of H. U. F. with retrospective effect so as to render the same immune from his personal tax liability by creating a fiction. No such difficulty arises for the Assessment year 1972-1973 inasmuch as the declaration was made during the accounting year relevant to the Assessment Year 1971-72 and when the year of account relevant to Assessment Year 1972-73 commenced the assessees income from the firm belonged to the H. U. F. We need not say anything more with finality on the above question as the point has neither been referred nor been argued before us but we merely point out that an important aspect has escaped the notice of the Income-tax Officer. The Commissioner has also not applied his mind to this aspect. We are making this observation so that in future if a similar question arises the taxing authorities may apply their mind to the above aspect. ( 9 ) IN the result we affirm the view taken by the Tribunal and answer the question referred to us in the affirmative and against the Revenue. Reference answered accordingly with no order as to costs. Reference answered in the affirmative. .