9911796707
TMI Blog1972 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... showed that Narmal Srinivas was assessed to income-tax during the years 1933-34, 1934-35 and 1935-36. The name of the business was changed to Nathmal Tolaram in the relevant previous year 1936-37. In that year, as the records revealed, the assessee was Nathmal Tolaram as H.U.F. For the earlier years, the status of that assessee is not clear as the relevant records containing the copies of the assessment orders were not preserved by the department. But, from the assessment year 1942-43, the assessee, Nathmal Tolaram, returned the income from the business as belonging to a H.U.F. up to the assessment year 1949-50. That family of Narmal and his sons, carrying on business as Nathmal Tolaram, remained joint till it was partitioned with effect from April 6, 1949 (the last date of 2005 R.N.). After the partition, the business at Dhubri and Gouripore was converted into a partnership business, as is evidenced by a deed of partnership executed by the three brothers on April 7, 1949 (annexure "A"). The material portion of the deed, for our purpose, may be set out: " Whereas all the parties had formed a Hindu undivided family and were living and carrying on business since long time as member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books maintained by the family at the time of the partition, the capital of the business standing in the names of various relations and female members was consolidated and Srinivas, Nathmal and Tolaram were credited each with Rs. 1, 18,172. There was a division of the capital account in the Hindu undivided family books on April 6, 1949. Srinivas Saraf as first party, Nathmal Saraf, Mahavir Prasad, minor represented by his father, Nathmal Saraf as second party, and Tolaram Saraf, Hanuman Prasad Agarwala, minor represented by his father, Tolaram Saraf, as third party, executed a deed of partition on August 23, 1950 (annexure "B"). The deed recites : " Whereas all the above three parties had formed a Hindu undivided family and have been living together and carrying on business since long as members of Hindu undivided family under the name and style of Nathmal Tolaram and were joint in mess and worship and had acquired properties and assets and whereas there was dispute regarding the control, management and enjoyment of the property and business and separate possession and ascertainment of due shares of the parties and whereas due to differences that arose amongst the members of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share income as individuals. On October 30, 1957, Srinivas, the first of the three brothers, died. Bhagwani Devi, his wife, entered the firm as a partner, thereafter. On March 28, 1959, the firm of Messrs. Nathmal Tolaram was shown to have been dissolved and a new firm, Nathmal Tolaram (Petrol Depot), was shown to have been started so as to continue the petrol business with the same partners. With the capital received on the dissolution of the firm of Messrs. Nathmal Tolaram, Tolaram started a business in the name of Tolaram Bijoy Kumar, to deal in jute and country produce. The income from this business is, admittedly, (that of) a Hindu undivided family business. It appears that for the year 1959-60, as in the previous years after the partition with effect from April 6, 1949, Tolaram, karta of the present assessee, H. U. F. Tolaram Bijay Kumar claimed to be assessed as an individual with regard to his income from the petrol business of Nathmal Tolaram (Petrol Depot) so that the said income in his hands was not to be included as income of the H. U. F. Tolaram Bijoy Kumar. Thus, for 1959-60, it was claimed that there should be two assessments, one on H. U. F. on the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ancestral property; and (2) separate property of coparceners thrown into the common coparcenary stock. Property jointly acquired by the members of a joint family with the aid of ancestral property is joint family property. Property jointly acquired by the members of a joint family without the aid of ancestral property may or may not be joint family property; whether it is so or not is a question of fact in each case. The term 'joint family property' is synonymous with 'coparcenary property' 'Separate' property includes 'self-acquired' property." "228. (1) Where property has been acquired in business by persons constituting a joint Hindu family by their joint labour, the question arises whether the property so acquired is joint family property, or whether it is merely the joint property of the joint acquirers, or whether it is ordinary partnership property. If it is joint family property, the male issue of the acquirers take an interest in it by birth. If it is the joint property of the acquirers, it will pass by survivorship, but the male issue of the acquirers do not take interest in it by birth. If it is partnership property, it is governed by the provisions of the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is adopted, for the share which is taken at a partition by one of the coparceners is taken by him as representing his branch. Again, the ownership of the dividing coparcener is such 'that female members of the family may have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it ' : see Arunachalam's case. It is evident that these are the incidents which arise because the properties have been and have not ceased to be joint family properties. It is no doubt true that there was a partition between the assessee, his wife and minor daughters on the one hand and his father and brothers on the other hand. But the effect of partition did not affect the character of these properties which did not cease to be joint family properties in the hands of the appellant. Our conclusion is that when a coparcener having a wife and two minor daughters and no son receives his share of the joint family properties on partition, such property in the hands of the coparcener belongs to the Hindu undivided family of himself, his wife and minor daughters and cannot be assessed as his individual property. It is clear that the present case falls within the ratio of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceded by "a family memorandum of partition" signed by all the parties on April 6, 1949. This fact is particularly noted in the deed of partnership dated 7th April, 1949. The aforesaid family settlement was later incorporated in a formal deed of partition dated 23rd August, 1950. A perusal of this deed clearly evidences an open acknowledgment by all the parties about the erstwhile joint family business carried on under the name and style of Nathmal Tolaram and that it was that business and the immovable properties of that Hindu undivided family that were the subject-matter of partition. The partition deed clearly shows that Tolaram Saraf was executing the deed of partition representing his branch of the family. The property thereby falling into his share under this instrument of partition is therefore invested with the character of joint family property of Tolaram and his sons. Again, it is with this property divided amongst the brothers that they constituted a partnership on April 7, 1949. When, therefore, Tolaram joined the partnership by investing his share of the property which he got by partition, he has joined the partnership of firstly Nathmal Tolaram and later Nathmal Tolara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad High Court in Chiranji Lal v. Commissioner of Income-tax is on all fours with the present case and we should accordingly hold in favour of the assessee. We have carefully examined the aforesaid decision. In our opinion, the facts of that case are not in accord with the basic structure of the Hindu undivided family with which we are concerned here. The following observations from that decision at page 721 will be to the point: "That particular asset upon partial partition went out of the fold of the larger Hindu undivided family of Chiranji Lal-Mohan Lal and even of the smaller family of Chiranji Lal when the half share of the capital which fell to his branch of the family was further divided in the books of the business between him and his two adult sons in specified shares. The partial partition of the business was thus complete." Mr. Lahiri, strenuously relied upon the following observations in that decision in support of his submission: " Once a partial partition is accepted as being genuine and not a colourable or sham transaction, the share of capital of each such coparcener thereafter ceases to be joint family asset and becomes his individual asset de hors the family, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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