9911796707
TMI Blog1969 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted under an indenture made on November 3, 1956. The said partnership deed is on record and indicates that the partnership was started by the assessee and his adult son, Lakshmi Narain Dalmia. The minor sons were admitted to the benefits of the partnership in the firm. Under clause 6 of the partnership deed the parties (the assessee and Lakshmi Narain Dalmia) were entitled to the profits earned and had to contribute to the losses sustained by the firm in accordance with their respective shares which were 1/5th share each. Clause 7 of the partnership deed provided that the three minors were admitted to the benefits of partnership in the firm and their respective shares were also 4/5th share each and that the minors would become part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efused to allow him to agitate the plea constituting the capacity in which the assessee was assessed. The department's appeal was allowed and the assessee's appeal was dismissed by the Income-tax Appellate Tribunal, by its consolidated order dated March 17, 1962. The assessee applied to the Appellate Tribunal to refer to this court certain questions of law which were said to arise out of the Tribunal's order dated March 17, 1962. So far as the request for referring the question as to whether the Appellate Assistant Commissioner was justified in not admitting the additional ground of objection raised before him is concerned, it was rejected by the Tribunal and no reference was made on that question. The only question of law which was refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm could not be included in the total income of the assessee under section 16(3)(a)(ii). It will be noticed that in the Bombay case there was no finding of fact reached by the Income-tax Appellate Tribunal to the effect that the interest was paid on capital invested and not on a loan or deposit. In the instant case, the Income-tax Appellate Tribunal had recorded a categorical finding that all the partners of the firm were originally members of a Hindu undivided family, that after effecting a partial partition of their business capital, they had formed a partnership in respect of the erstwhile Hindu undivided family business assets and the business assets were agreed to be retained in the partnership as capital. The Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived, even if indirectly, from such admission. In other words, the view expressed was that if the minors had not been admitted to the benefits of the partnership, they could not have contributed to the capital and would not have earned any interest on it. The Assam case was followed by this court in Ram Narain Garg v. Commissioner of Income-tax wherein it was held by a Division Bench that the interest paid to a minor son admitted to the benefits of a partnership on his capital investment was the income derived directly or indirectly by him from the admission and was includible in the income of the father under section 16(3)(a)(ii) of the Income-tax Act, 1922. Thus, on the materials before it, the Income-tax Appellate Tribunal, in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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