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TMI Blog1972 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ted:- 3-1-1972 - Judge(s) : R. S. PATHAK., H. SWARUP. JUDGMENT The judgment of the court was delivered by PATHAK J.- A Hindu undivided family, of which Motilal was the karta, carried on several businesses. One of the businesses consisted of money-lending and it was carried on under the name and style of Motilal Bankers. During the previous year relevant to the assessment year 1961-62, with which we are concerned, the karta, Motilal, entered into partnership with Narendra Kumar, an undivided junior member of the family. Narendra Kumar brought in a sum of Rs. 5,000 to the business and became an eight anna partner in it. For the assessment year 1961-62, the Partnership firm applied for registration under the Indian Income-tax Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act ? " And in the case of the Hindu undivided family the question referred is: " Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the partnership formed by Sri Motilal, the karta of the Hindu undivided family, with Sri Narendra Kumar, an undivided junior member of the same family, quoad his separate property was valid in law, and, therefore, the share income coming to the lot of Sri Narendra Kumar from the business, Motilal Bankers, was not assessable in the income of the assessee family ? " It seems to us fairly plain that the view taken by the Tribunal is right in law. Motilal, the karta of the Hindu undivided family, entered into partnership with Narendra Kumar, an undivide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith others, including his family, so long as it is represented in such transactions by a definite personality like its manager. In such a case he retains his share and interests in the property of the family, while he simultaneously enjoys the benefit of his separate property and the fruits of its investment. " We have been referred on behalf of the revenue to Firm Bhagat Ram Mohan Lal v. Commissioner of Excess Profits Tax. In that case, the Supreme Court merely held that when the karta of a Hindu undivided family entered into partnership with strangers, the individual members of the family could not be said to have become partners also. After referring to Lachhman Das, the Supreme Court observed: " But in the present case, the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners of the Hindu undivided family. The Supreme Court observed: " The Indian Contract Act imposes no disability upon members of a Hindu undivided family in the matter of entering into a contract inter se or with a stranger. A member of a Hindu undivided family has the same liberty of contract as any other individual : it is restricted only in the manner and to the extent provided by the Indian Contract Act. Partnership is under section 4 of the Partnership Act the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all : if such a relation exists, it will not be invalid merely because two or more of the persons who have so agreed are members of a Hindu undivided family." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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