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TMI Blog1942 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Punjab. It is not disputed that they form a Hindu undivided family, but with them the general Hindu law is superseded by custom which provides special rules upon many points of family law. The present appeal was brought by Sir Sundar Singh Majithia as father and head of the family, but he has since died and the sons are now the appellants. The written instrument dated February 12, 1933, describes itself as an agreement of partnership and the parties to it are the father (first party), the mother (second party) and the three sons (third, fourth and fifth parties). The recitals and clauses 2, 7 and 8 are as follows:- Whereas the first Party has set up machinery for manufacture of Sugar and extraction of essential oils in his estate in the Gorakhpur District at village Saraiya, Tappa Keotali, Pargana Hewali Gorakhpur and Sugar and essential oils are manufactured there. And whereas under the personal law of the Parties who are Sher Gill Jats of Amritsar District in the Punjab, the father in his life-time has a right to divide such property as aforesaid, and to give away shares, whether the nature of it is that of self-acquired or ancestral property. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans (inter alia) for making any addition or improvements to the business. They were to draw monthly allowances-Rs. 2,000 in the case of the father, ₹ 1,500 in the case of each of the two sons. In the event of a difference of opinion between the partners the father was to have two votes and a casting vote, each other partners to have one vote. Upon the terms of this agreement it is to be observed that it does not itself purport to effect any partition of family property or to be a transfer of any property movable or immovable by the father to the other parties. It recites that the father has given a share to the other parties. So, too, it does not state that the partnership came into existence on the date of the agreement, February 12, 1933, but that the parties have already entered into a partnership. It would appear indeed to have been the assessee's case that the oral partition and commencement of the firm took place in September, 1931, and that certain entries were made in the books at that time. Before 1932 the profits of the factory had been returned and assessed to tax as part of the income of the joint family but on February 13, 1933--that is, towards the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the instrument is intended by the parties to have real effect as governing their rights and liabilities inter se in relation to the business or whether it has been executed by way of pretence in order to escape liability for tax and without intention that its provisions should in truth have effect as defining the rights of the parties as between themselves. To decide that an instrument is in this sense not genuine is to come to a finding of fact: whether there was evidence upon which it was open to the Income-tax Authority to come to such a decision is a question of law. Their Lordships do not understand that this is the question of law which the Commissioner by the case stated has intended to refer nor do they gather that he has arrived at any such finding of fact. The Commissioner has given an elaborate account of the returns, contention and correspondence connected with the assessments made upon the profits of this factory since the year 1918. But the substance of the case stated by him comes in the end to this, that the factory has until recently belonged to the joint family and has been assessed as such; that the members of the family now purport to have carried out an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not purport to be itself the transfer of any property or interest from the father to the other members it does purport to express the terms on which the parties after such transfer had agreed to carry on business as a firm. Their Lordships think that it was an essential feature of the partnership agreement as expressed in the instrument of February 12, 1933, that the wife and sons had a share in the im- movables. On this view the High Court had no difficulty in agreeing with the conclusion arrived at by the Commissioner on the hypothesis that these immovable were self-acquisitions of the father. On the hypothesis that they were joint family property, however, they were bound to disagree with his view that the alleged transaction could not be a partition because the shares were not in accordance with the parties' legal rights. Indeed this argument was not maintained before the High Court, but an argument based on Section 25-A of the Act was put forward instead on the Commissioner's behalf. The High Court accepted this new contention and was thus prepared to answer the question referred in the negative on the hypothesis of joint family property as well as on that of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such prohibition. It has no reference at all to any case in which the Hindu undivided family remains in existence at the time of assessment. No difficulty whatever in the assessment of a Hindu undivided family is caused--or was ever thought to be caused--by the facts that in one year it has certain assets and certain income therefrom and that in the next year it is found to have parted with one asset and to be no longer in receipt of the same income. The same assessee has a different income in each year--that is all. It matters nothing whether the particular asset no longer possessed by the undivided family has become the separate property of a member or belongs to a stranger. Section 25-A is directed to the difficulty which arose when an undivided family had received income in the year of account but was no longer in existence as such at the time of assessment. The difficulty was the more acute by reason of the provision--an important principle of the Act--contained in Section 14(1): The tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family. Section 25-A deals with the difficulty in tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a voluntary transfer. But on the assumption that the factory land and buildings were joint family property it has not been shown that a partition at the hands of the father could not be effected without a written instrument. To answer the question of law which has been propounded by the Commissioner it is necessary to descend from the realm of hypothesis to the region of fact. The Commissioner has taken pains to state some matters very fully, but he has not found the material facts as he should have done. It is necessary to know as regards (a) the business, machinery, plant and other movables; (b) the factory buildings and land whether they were before 1931 the selfacquired property of the father or his ancestral property or joint family property or whether they fall into some other and what category according to the customary law. It is necessary that the customary law of the family should be found as a fact so as to show what right if any the father had to partition or transfer the movable or immovable property above-mentioned, to whatever category it may be found to belong in whole or in part. The riwa-ji-am is evidence of the custom but it is not conclusive and a finding as t ..... 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