9911796707
TMI Blog1950 (1) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was right in holding that the proportionate income of the managing agents, Messrs. M. Nanjappa Chettiar & Sons, was the income of the Hindu undivided family of Murugappa Chettiar and not the individual income of the karta?" The facts relevant for the disposal of this reference may be shortly stated. On the 12th of May, 1932, Murugappa Chettiar and his brother Chikkanna Chettiar entered into a managing agency agreement with the Dhanalakshmi Mills Ltd., where under Messrs. Nanjappa Chettiar and Sons, the name of the firm of which the two brothers are partners, was appointed managing agents of the company subject to certain conditions and rights enumerated in the agreement. The two brothers, at the time when the agreement was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gappa, the father, is no doubt also the karta of that family. The commission earned by Murugappa as managing agent under the managing agency agreement above referred to can be established to be joint family property in one of two ways: (1) either by establishing that the managing agency agreement was in fact obtained on behalf of the joint family and that therefore the commission earned under that agreement must be deemed to be property of the family ; or (2) by establishing that the income was earned by utilising joint family property or joint family money or at any rate by utilising the property of the joint family to its detriment. If none of these is established, it must be presumed that the managing agency commission earned by Murugapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the agreement was entered into on behalf of the family. Even contract entered into by a person who happens to be the manager of the family is prima facie a contract entered into in his individual capacity, unless there is a clear indication in the document itself that he entered into it on behalf of, and for the benefit of, the family. In this document, which was entered into by the two brothers in their individual capacity, there is nothing to support the contention that it was entered into on behalf of the family. Further, liberty was given under the agreement to the two partners of the firm of Messrs. Nanjappa Chettiar and Sons to take any others also into the partnership and the change in the constitution of the firm, or the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kshmi Mills. There is no qualification prescribed in the agreement that the managing agents should hold any shares in the company and that they should so hold and continue to hold the shares during the continuancy of the managing agency agreement. The purchase of the shares, the acquisition of the rights under the managing agency agreement, and the agreement itself, are not in any manner connected and therefore it cannot be stated that the joint family property suffered any detriment to any extent by the conduct of these two persons in obtaining the managing agency agreement. The shares have been earning large dividends, in some years, as large as the face value of the shares, and really no detriment was suffered by the family by the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h formed part of the joint family property of the person or persons who entered into the managing agency agreement, and as stated at page 132 of the report, the new company, i.e., Messrs. Purushottam G-ovindji & Co., was appointed managing agents and as part and parcel of that arrangement, the Hubli Mills in which the assessee admittedly held a share as karta were sold by the partnership to the new company. The managing agency therefore was held, in that case, to have been derived from, or acquired with, the assistance of the joint family. The prima facie view that the rights under the managing agency agreement acquired by a coparcener would be his individual property may be rebutted by showing, as in that case, the family estate had suffer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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