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TMI Blog1955 (4) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... estate. The questions that were referred to this Court in Case Referred No. 108 of 1953 were : (1) Whether the share income from the three tea estates situate in Ceylon are assessable under the Income Tax Act, 1922, in the hands of the assessee family notwithstanding that succession to the said estates was regulated by the Ceylon law. (2) Whether the inclusion of the salary paid in the firm to S. T. P. Marimuthu Pillai for services rendered by him in the total income of the assessee family is legal and proper. (3) Whether the assessee is entitled to the allowance under the proviso to section 4(1) (c). 2. Despite the change in the wording, question 2 in Case Referred No. 46 of 1951 is substantially the same as question 1 in Case Referred No. 108 of 1953. 3. A genealogical table of the family was furnished at page 24 of the printed papers in Case Referred No. 46 of 1951. Mari Kangani migrated to Ceylon and acquired properties there, mainly tea estates known as the Marieland group of estates. The lex loci which governed succession and inheritance of immovable properties Ceylon did not recognise undivided Hindu families, though in India Mari and his descendants were g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. P. Marimuthu, S. Srinivasan and S. Marimuthu, as the partners. The five minors were shown as having been admitted to the benefits of that partnership. Each of the eight of the co-owners of the estates had an eighth share in the assets and profits of the partnership. 5. The income from the Knightsdale group of estates, which was remitted to India where the owners lived, was treated as income from business to which apparently no objection was taken before the departmental authorities or before the Appellate Tribunal. The learned counsel for the assessee contended before us that it was not income from any business as such, but it was really income from the immovable properties held by the eight members of the three families in separable shares. Of course, if the income received in India had arisen directly out of the immovable properties held in Ceylon, the nature of that income should only be correlated to the right in which the immovable property was held in Ceylon. That each of the eight members held his share in the immovable properties in Ceylon as his separate property, despite his membership of a coparcenary in India, could admit of no doubt. It should therefore follow t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thers Deenadayalan, Ramanathan and Ponnuswami, (2) S. Srinivasan as the kartha of the joint family consisting of himself and his undivided brother S. Marimuthu, and (3) the coparcenary which consisted of the minors Ramanathan and Ganesan, represented by their guardian, S. T. P. Marimuthu. There were two brothers who were also partners, Somasundara and R. M. Srinivasan, who represented the line of Arunachala, the elder son of Mari Kangani. But they can be left out of further account. This was the partnership that continued practically till 22nd March, 1947. The assessee firm adopted the calendar year as the accounting year. So for the accounting years 1944, 1945 and 1946, corresponding to the assessment years 1945-46, 1946-47 and 1947-48, the partnership, as far as these three families were concerned, consisted only of S. T. P. Marimuthu as the kartha of his joint family, Srinivasan as the kartha of his joint family and S. T. P. Marimuthu in his capacity as the guardian of the coparceners Ramanathan and Ganesa. Such a partnership the kartha of the joint family was entitled to enter into in the circumstances of this case - the business being ancestral family business. That the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on each of the eight members occupied under the deed of 22nd March, 1947. There is no question of any coparcener blending his income with the income of the joint family. That was certainly impossible in the case of the minor coparceners. there was not even any evidence that S. Marimuthu and S. Srinivasan, who were adults and who constituted a coparcenary, pooled their separate income with the income of the properties which they held as a joint family. The Income Tax law does not authorise aggregation of the separate income of the members of a coparcenary for purposes of a assessment to Income Tax. So, with reference to 1947 and the subsequent accounting years, the apportionment of the income of the registered firm could only be on the basis that the share in the income which each of the eight persons was entitled to was his separate income and assessable only on that basis. 10. On 22nd March, 1947, simultaneously with the execution of the deed of partnership for the management of the business connected with the Knightsdale group of estates, another partnership agreement of the Marieland group of estates. 11. In the larger group Somasundara and Srinivasan, who represented th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business which consisted of the management of the immovable properties which constituted the Knightsdale group of estates as his separate property. It is on that basis that the income of each of these eight co-owners should be assessed for the income for each of the accounting years 1942 and 1943. The Appellate Tribunal recorded in its judgment in the appeal preferred to it that the auditors report which the assessee firm produced before the departmental authorities, itself apportioned the income from the Knightsdale estate between the three family units. The Tribunal observed : This clearly shows that the parties themselves had no doubt in their minds that it was the three groups of families which were enjoying the income from the estate. There is not whisper in this report that the property or the income was that of the individual coparceners and not of the family. Then again, the partnership deed, dated 17th January, 1944, was executed by the three groups of families, and not by the individual members thereof and the shares of the three families were specified as one-half, one-fourth and one-fourth respectively. 13. The conduct of the assessee firm, evidence of which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no part of the control of the management of the Knightsdale group of estates of Ceylon was exercised by S. T. P. Marimuthu from India. If S. T. P. Marimuthu had any evidence to prove that the control over the management of the business was exercised all through the year 1942 only by his power-of-attorney agent in Ceylon, the assessee should have placed that material on record. In the absence of such material the decision of the Tribunal will have to be accepted as correct. 17. Question 2 in Case Referred No. 108 of 1953 ran : Whether the inclusion of the salary paid in the firm to S. T. P. Marimuthu Pillai for services rendered by him in the total income of the assessee family is legal and proper. 18. That salary earned by S. T. P. Marimuthu by his own efforts was obviously his separate property. It could not be said that the income that he received as remuneration for the services he rendered as in any way acquired by expenditure detrimental to the property of the joint family of which he was the kartha. The Tribunal, which confirmed the decision of the departmental authorities on that point, was not right in aggregating this item of what in law was the separate inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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