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TMI Blog1965 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ming that the whole of this income, Rs. 1,34,944, was in reality not solely his but there were nine other sharers in that income. In support of this he produced a partnership deed dated the 30th March, 1951 (exhibit B), which, among other things, said that the assessee, Lala Daulat Ram, and other persons had obtained an excise contract for the sale of liquor for the year 1950-51, and that Lala Daulat Ram had a share of Rs. 0-3-11 1/4 or, in other words, 47.25 pies, and further that the other nine parties mentioned in the partnership deed of the 30th March, 1951, were partners in the said share of Rs. 0-3-11 1/4 in the proportion mentioned in that deed, Lala Daulat Ram's share being only Rs. 0-1-3. This deed relied upon by the assessee also stated that the partnership was for the period of the liquor contract, that is, from the 1st April, 1950, to the 31st March, 1951, and the profit and loss in the share of Rs. 0-3-11 1/4 was to be divided in proportion to the share held by the partnership including the assessee. The claim thus was that, although in the partnership deed dated the 1st April, 1950 (exhibit A), concerning the liquor business the assessee was shown as owning 47.25 pies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the assessee, were partners in the share of Rs. 0-3-11 1/4, held by the assessee in the partnership firm constituted by the deed of the 1st April, 1950 (exhibit A), and that the profits and losses arising out of that share were to be divided among the ten partners in certain proportions. If this statement is true, as it must be assumed, then it seems to follow that the share standing in the name of the assessee, that is, 47.25 pies, in the partnership firm, Daulat Ram Hans Raj Co., was not entirely the property of the assessee but of himself and nine other persons mentioned in the second deed of the 30th March, 1951. It would follow from this that the income derived from that share was the income of the assessee and nine other persons in certain proportions. There is, therefore, a diversion of the income at its source, and, since what is liable to tax in the hands of the assessee is only his own income, the assessee cannot be taxed beyond what his real income is out of that share-47.25 pies. This was the line of argument accepted by the Bombay High Court in Ratilal B. Daftari v. Commissioner of Income-tax. The assessee in that case was a partner in a registered partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Sitaldas Tirathdas's case, the principle being the same as stated in Raja Bejoy Singh Dudhuria's case. What was found by the Supreme Court was that Dudhuria's case was not applicable to the facts of Sitaldas Tirathdas's case, and indeed the facts were different. The assessee, Sitaldas Tirathdas, derived income from various sources and that income was correctly computed by the income-tax authorities. His wife and children had, however, obtained a decree from a civil court for maintenance and the assessee claimed that, as he was obliged to pay maintenance under the order of a court, the amount of maintenance should not be considered his income. The Bombay High Court apparently accepted that submission but the Supreme Court held to the contrary, the reason being that the decretal amount was not a charge on the property, as it had been in Raja Bejoy Singh Dudhuria's case. It is clear that on the facts of Sitaldas Tirathdas's case, the assessee was merely obliged to dispose of his own income in a particular manner and it could not be said that the income itself was the income of his wife and children. No reference was made by the Supreme Court to the case of Ratilal B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hardy before us rely. The case is reported as Mahaliram Santhalia v. Commissioner of Income-tax. The facts of that case were similar to the facts of Ratilal B. Daftari's case Mahaliram Santhalia, the assessee, was a partner in a firm called the Benares Steel Rolling Mills and, when an application for its registration was made, the assessee stated that he was a partner of the firm in his " individual capacity ". Later on, however, when the income falling to his share as mentioned in the partnership deed was taken to his personal account and charged to income-tax, he claimed that the share standing in his name did not belong solely to him but was the property of another firm called Messrs. Radhakissen Santhalia of which he was also a partner and only his proportionate share in the income should be assessed. This claim was negatived by the Calcutta High Court. The learned judges first observed that the assessee, having at one stage stated that he was a partner of the Benares Steel Rolling Mills in his " individual capacity ", could not be later permitted to resile from it and allege to the contrary. The learned judges then went on to consider the scheme of the Income-tax Act contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im and nine other persons, his share being only 15/47.25 pies ? The answer to that question turns on the meaning of the deed of the 30th March, 1951 (exhibit B). Mr. Hardy says that the share itself belonged to the assessee and by the deed (exhibit B) the assessee merely agreed with certain other persons to divide the profit from that share among ten persons including himself. Mr. Bajaj, on the other hand, contends that the true meaning of the deed (exhibit B) is that the share itself was the property of the ten persons named in that document. The deed (exhibit B), in my opinion, says clearly that the persons named there were the owners of that share and if that is correct, then the income from the share must be taken to be the income of not only the assessee but of all the ten persons in proportion to the shares mentioned in the deed. I thus find myself of the same opinion, and if I may say so, for the same reasons, as mentioned by the Bombay High Court, in Ratilal B. Daftari,'s case. On the assumption, therefore, that the deed (exhibit B), dated the 30th March, 1951, is genuine, I would, in answer to the question posed by the Income-tax Appellate Tribunal, say that on the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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