1979 (1) TMI 41

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..... he HUF of which Shri Ramchandra Lalbhai was the karta, for the assessment year 1944-45, chargeable accounting period ending 31-3-1944 and assessment year 1947-48 ? " We need state only the material facts which are relevant for the purpose of considering the above question. The assessee was a HUF consisting at the material time of one Ramchandra Lalbhai Banker, his wife and his son. The family held 350 shares in a private limited company called Chinubhai Lalbhai & Brothers Ltd. (referred to hereafter as the " Managing Agency Co. "). The other shareholders in the company were Chinubhai Lalbhai, that is, brother of Ramchandra Lalbhai, holding 350 shares, Jasubhai Lalbhai, another brother of Ramchandra Lalbhai, also holding 350 shares and some .....

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..... fact that in the years 1943 and 1944 , the Lal Mills had sold cloth respectively worth Rs. 39,31,012 and Rs. 9,58,459 to about 19 parties who were mere nominees of the managing agents and that in fact the families of the two brothers controlling the Managing Agency Co. had derived extra profits by sales through these nominees. The total sales were estimated at Rs. 48,90,000. The extra profits were determined at 20% of these sales and the profits having been arrived at Rs. 9,78,000, the ITO held that half of these profits belonged to the assessee-family while the other half belonged to the branch of Jasubhai Lalbhai. The AAC confirmed these assessments and the assessee had then appealed to the Income-tax Appellate Tribunal. We are not conc .....

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..... see, argued that the income which has been taxed in the hands of the HUF was really the income of Ramchandra Lalbhai and not of the HUF because no nexus has been established between that income and the HUF. It is difficult to see how it can be contended that there was no nexus established between the HUF and the income earned by Ramachandra Lalbhai. It has not been disputed before us that it was the HUF which had purchased the shares of the Lal Mills and the Managing Agency Co. and that Ramchandra was acting on behalf of the HUF when he was managing the affairs of the Managing Agency Co. and the Lal Mills. It is obvious that but for the fact that the HUF was a shareholder of the Managing Agency Co. and the Lal Mills, Ramchandra Lalbhai, wh .....

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