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TMI Blog1963 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... -Mudaliars by caste governed by the Hindu Mitakshara law. The suit was one for partition in which the plaintiff claimed one-fourth share in the plaint A and B and C schedule properties; A schedule consists of bank deposits, shares in limited companies, Government promissory notes, cash and sundry outstanding; B schedule comprises improvable properties; C schedule consists of moveables like silver wares, gold jewels and diamond jewels. A Commissioner appointed by the Court below took an inventory of the household and submitted a report on 18th April 1958. The Court below has granted a decree for division of plaint A and B schedule properties and of items 1 to 33 in the Commissioner's inventory. There is no decree in respect of plaint C schedule and the necessary implication is that the suit ,is dismissed so far as C schedule is concerned. The first defendant has two unmarried daughters, of kinder years staled to_ be now 9 years and 6 years of age and a provision has been directed to be made in the final decree for their marriage expenses in the sum of ₹ 2000 each. This is the decree which is now the subject-matter of the appeal. 3. in this appeal the first defendant rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sons. The evidence of the first defendant is that one Gopalaswami was a partner with Vaiyapuri in the agency business but there is no documentary evidence to support it. Apart from the fact that the evidence of the first defendant is interested, he admitted in cross-examination that the arrangement between Gopalaswami and Vaiyapuri was only private . Admittedly there was a partition between Vaiyapuri and his sons in 1942 as evidenced by Ex. A. 1. There is no reference to the managing agency in the partition deed. But it is not in dispute that after the partition Vaiyapuri and all his adult sons constituted themselves into a partnership and carried on the managing agency business. One of the sons of Vaiyapuri, Ganapathi was a minor on that date and it is obvious that he did not join the partnership as he could not do' so in law. In 1952, however. Ganapathi. also became a partner in Vaiyapnri Mudaliar and Sons; presumably by that time Ganapathi had attained majority. This managing agency with six partners subsisted till 1953 when Ponnuswami and Chockalingam, two of the brothers of the first defendant, retired from the partnership after receiving cash for their due share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegorically he has made the admission : ( V. V. C. R.) Vaiyapuri Mudaliar and Sons was a joint family firm. V. V. C. R. Vaiyapuri Mudaliar and Sons were the managing agents prior to the partition of 1942 (page 59 of the printed papers)...... After the partition of 1942 the joint family managing agency business was converted into a partnership firm. My brother Ganapathi was a minor at the time of that partition (page 61 of the printed papers). This admission, which has not in any way been sought to be explained by the first defendant, practically cuts at the Toot of his present contention that the sum of ₹ 2,63,200-62 would represent his individual or separate asset. The learned Subordinate Judge has therefore quite properly observed in his judgment as follows : The managing agency business was admittedly joint family business, and the money got by defendant 1 by releasing his family's one third share in the managing agency, admittedly entered in the joint family accounts are joint family monies. It cannot therefore be held that those moneys are his self acquisitions and that the plaintiff is not entitled to any share in those monies and investments. In our opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the joint family properties. 8. Mr. R. Gopalaswami Aiyangar learned counsel for the first defendant, contends that the partnership business of the managing agency was not a joint family business as the joint family of Vaiyapuri and his sons became disrupted in 1942, that the quondam members of the family formed, themselves into a partnership, and that such a partnership rather indicated that the business was the individual business of the partners and not a joint family business in the guise of partnership. Learned counsel was at pains to point out that the business of managing agency had no relation to the holding of shares in Pullicar Mills Ltd, by the first defendant or his father, Vaiyapuri and that there is no evidence to show that the business was the outcome of the employment of joint funds, if the managing agency did not grow out of any family asset, so the argument runs, it must be presumed that it was a separate venture of the family members unconnected with the properties of the family or their status as coparceners. We wish to point out at this stage that it is conceded by Mr. Gopalaswami Aiyangar that the shares held by the first defendant in the Pullicar Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of account 1942-43, Murugappa obtained for his share of the managing agency commission a sum of ₹ 26607. This amount was treated by the Income Tax Officer as income of the joint family of Murugappa and his sons and was assessed as such, overruling the objection of Murgappa that it was really his individual income. This decision was upheld by the Appellate Assistant Commissioner and also by the Appellate Tribunal. The following question was therefore referred to this Court: Whether on the facts and in the circumstances of the case, the Tribunal was right, in holding 'that the proportionate income of the managing agents Messrs IVI. Nagappa Chettiar and Sons was the income of the Hindu undivided family of Murugappa Chettiar and not the individual income of the kartha? A Division Bench of this Court, Satyanarayana Rao and Viswanatha Sastri, JJ. held that the amount in. question was the separate earning of Murugappa not includible in the joint family income. Satyanarayana Rao, J. observes thus at page 19 (of Mad LJ) : (at pp. 829-830 of AIR): The next contention is that a large amount was invested by the two brothers in purchasing shares in Messrs. Dhanalakshm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said B. K. Rohatgi and should not be added to the income of the Hindu undivided family. The two questions raised in consequence of a reference Under Section 66 of the Indian Income Tax Act were as follows : 1. Whether on the facts and in the circumstances of this case, the Income Tax Appellate Tribunal was justified in apportioning the sum of '₹ 61,282 into parts assessing one in the hands of the assessee Hindu undivided family and the other in the hands of Mr. B. K. Rohatgi? 2. If the answer to the above question be in the negative, whether the assessment of the said sum of ₹ 61,282 should be on Mr. Rohatgi personally or on the assessee Hindu undivided family . The Calcutta High Court answered the first. question in the negative and the second question in favour of the assessee holding that the sum of ₹ 62,282 was Rohatgi's personal income. Before the Supreme court, only the correctness of the answer to the second question was canvassed. The short point for consideration was whether the sum of ₹ 61,282 represented income of the family or was it the personal and separate income of Rohatgi. Referring to the decisions of this Court, S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rule can be deduced in matters of this description as the question of the nature of the managing agency would depend upon the background of facts and circumstances in which the agency was created. In the case before the Supreme Court, the family funds were utilised and employed in promoting the company and in acquiring the shares. It was also found that the Managing Directorship was closely linked up with the floatation of the company. In Murugappa Chettiar's case, [1952]21ITR319(Mad) there was complete paucity of evidence to connect the managing agency with the holding of the shares and apart from the fact that the family owned shares in the company and that there was a partnership regarding the managing agency between the members no further evidence was available. 12. If in any given case it can be postulated, that the managing agency was given to the members of a family in view of their predominant share position in the company, and that the shares were acquired from and out of the family funds, it would seem to follow inevitably that the managing agency itself was a product of the investment of the family funds in shares. But so far as this case is concerned, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtain for a quarter share in the sum of ₹ 4800 would not certainly bind her. When confronted with this position Mr. V. Thyagaraja Iyer, learned counsel for the plaintiff, conceded that he is unable to sustain his claim in regard to this amount. 14. Items 11, 12, 24, 25, 27, 28 and 29 in the Inventory of the Commissioner are articles of jewellery; they are diamond ring with nine stones; diamond ring with single stone, a gold chain, diamond rings, jadavilla, diamond car rings and gold necklace. These ornaments are claimed by the first defendant as belonging to his second wife. It is very likely that these jewels belong to her. What is however, pointed out by learned counsel for the plaintiff is that even in the partition between Vaiyapuri and his sons the 'first defendant obtained certain articles of jewellery like diamond ring, chain and addigai, necklace etc. This partition was of the year 1942, and there is no evidence to show that the articles described in the inventory are the same as the items of jewellery obtained by the first defendant under the partition of 1942, with his father and brothers. It is for the plaintiff to establish that the items of jewellery ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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