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TMI Blog1978 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ndas be clubbed in the income of his father, Manaklal, who is not a partner in the said firm ? " Facts leading to this reference have been stated in detail by the Income-tax Appellate Tribunal (hereinafter referred to as " the Tribunal " ), in its order of reference dated August 21, 1973, and may briefly be stated as under : Manaklal, s/o Motilal (hereinafter referred to as " the assessee "), was assessed for the years 1961-62 to 1965-66, for the accounting period ending on Diwali of 1960 to 1964. Originally, he was a partner in the partnership firm of Manaklal Gordhandas in which he and his father-in-law, Ranchhoddas, were the only two partners. This partnership firm carried on business of sale and purchase of bullion and money-lending also. This partnership continued up to October 31, 1959, when it was dissolved. According to the terms of the dissolution, the share which Manaklal had in this firm, was treated as a loan to a newly constituted partnership firm under the name " Manaklal Gordhandas ", which was formed by Ranchhoddas and one Murlidhar on November 1, 1959. In this new partnership firm, Jagmohandas, the minor son of Manaklal, was admitted to its benefits. On the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently, as per orders passed on the assessee's application, the said gift was treated as a gift not from Manaklal but from Ranchhoddas, the maternal grandfather of Jagmohandas. After the decision of the Tribunal, the assessee unsuccessfully requested the Tribunal to draw up the statement of the case and refer the questions of law to this court for opinion. The Tribunal, by its order dated October 16, 1970, refused to refer the case to this court. The assessee then approached this court and as per orders passed in Miscellaneous Civil Cases Nos. 145/1971 to 149 of 1971, the Tribunal was directed to refer the aforesaid two questions of law to this court for its opinion. This is how the case has been referred to this court for opinion on the aforesaid two questions of law. The contention of the assessee is that initially the Tribunal erred in holding that the said gift of Rs. 12,500 to the minor, Jagmohandas, was from the assessee and not from Ranchhoddas, the assessee's previous partner, in the dissolved firm, Manaklal Gordhandas. It is then contended that even after holding that the said gift was from the maternal grandfather of the minor, the Tribunal erred in law in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e minor in the newly constituted firm. Being a minor, he was not required to contribute any capital in the newly constituted partnership firm. Certain entries from the account books were filed in this court, according to which, this amount has been credited in the name of the minor and is not shown as a contribution of his share capital in the newly constituted firm. Whether it was an amount simply deposited by the minor in the newly constituted firm in his account or was by way of contribution of his capital, is not very material for this reference. It is, however, clear that it could not be as a contribution of his share capital because as a minor he could not be a partner in the partnership firm and being only admitted to the benefits of the partnership firm, he was not required to contribute his share capital. It is an admitted fact that the source of the said sum of Rs. 12,400 was the gift made to the minor by his maternal grandfather, Ranchhoddas. Ranchhoddas had withdrawn this amount from the old partnership firm prior to its dissolution and it was debited to his individual account in the partnership firm. Manaklal was thus not in any way concerned with the receipt of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court decision in Rai Bahadur Mohan Singh Oberoi v. CIT [1973] 88 ITR 53 and contended that once the Tribunal has found as a fact that Manaklal was the real holder of the share of his minor son, Jagmohandas, in the newly constituted firm, this court by giving its opinion on the reference made to it, could not disturb the said finding of facts and has to accept it as correct. No doubt, in this case, it was held by the Supreme Court that once the assessee was found to be the real owner of the shares purchased benami in the name of his wife and two minor sons, it would be presumed that the ownership in the shares continued to remain vested in the assessee unless it was shown that because of some subsequent event he had ceased to be the owner of his shares. In the instant case, this court, by the order passed on March 30, 1970, had held that on the finding recorded by the Tribunal, questions of law do arise and it was in the light of this view that the Tribunal was directed to refer the aforesaid two questions of law to this court. The view taken by this court, in the order dated March 30, 1970, is therefore, binding on the revenue and cannot be reagitated in the present reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the income arising to the 3 minor sons by virtue of their admission to the benefits of the partnership in the firm, could not be included in the total income of the assessee. In the instant case, as found by the learned Tribunal itself, the gift was not from the father of the minor, the assessee in this case, and on the contrary, it was a gift from the maternal grandfather. There was, thus, no connection whatsoever between the gift made to the minor and the assessee, Manaklal. That was a transaction of gift independently of the assessee and it cannot be said that the profit which the minor earned in the new partnership firm were from any assets transferred by his father, Manaklal. Consequently, the gift being not from the father, the assessee in this case, it could not be connected with him for the purposes of assessment of his individual income. Similarly, the income which the minor received as the share of its profits in the newly constituted firm, could not be regarded as an income earned by the assessee, Manaklal, benami, in the name of his minor son, Jagmohandas. We are, therefore, clearly of the view that the Tribunal was not correct in holding that Jagmohandas was a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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