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TMI Blog1980 (1) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the salaries enjoyed by Seth Puran Chand and Shri Ram Niranjan from the Kundan Sugar Mills P. Ltd. constituted their individual income ? " Coming to the first question, which is at the instance of the assessee, the relevant facts are these: An HUF owned a sugar mill being the Kundan Sugar Mills. In 1951, there was a partition in the family and the business was being run by the firm. The firm had three partners, two of whom represented their smaller HUF which had come into existence as a result of a partition. The assessee was one of the kartas who represented the smaller HUF. This firm was dissolved on December 14, 1961, and in the dissolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention to run and operate the sugar mills, inasmuch as the assessee had transferred the entire running business of the sugar mills to the company. It, accordingly, held that the lease money had to be taxed under the head " Income from other sources " and not as " Income from business. " In holding so, it relied on New Savan Sugar and Gur Refining Co. Ltd. v. CIT [1969] 74 ITR 7 (SC). Counsel for the assessee has not been able to persuade us that the ratio of the New Savan Sugar and Gur Refining Co. Ltd. will not apply to the present case. We think that the Tribunal was right in holding against the assessee on this point. Coming now to the second question, the facts leading to the lease of the sugar mills business have already been set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility. The HUF had also offered its assets as security for making funds available to the limited company. On these considerations, he held that the lease amount paid by the company to the HUF was inadequate, considering the assets leased out and the other facilities given to it by the HUF. He, accordingly, held that the salaries paid to the two members of the HUF were by way of compensation for use of the family assets in the business of the limited company. The assessee took up the matter in appeal before the Tribunal. The Tribunal noticed the various reasons given by the AAC and the ITO for holding that the salary income was chargeable in the hands of the HUF and did not record its express dissent from the view expressed by the AAC on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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