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TMI Blog1976 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... r's order ? 3. Whether, on the facts and in the circumstances of the case, particularly in the face of assessee-Hindu undivided family's conduct in having shown Satinder Kumar's share income from M/s. Vijay Traders in its return of loss for the assessment year 1967-68 and in its original return for the assessment year 1968-69, was the Tribunal's finding that the 11% share income from M/s. Vijay Traders had been right till October 13, 1969, treated as belonging to the Hindu undivided family bad as being based on no evidence ? 4. Whether the Additional Commissioner's order dated March 17, 1972, setting aside the assessments of the assessee-Hindu undivided family for the assessment years 1968-69 to 1970-71 was sustainable for the assessment years 1968-69 and 1969-70 in view of the facts that the 11% share income from M/s. Vijay Traders had been separately assessed in the hands of Satinder Kumar, individual, for the aforesaid two years and that those separate assessments had on March 5, 1974, the date of the Tribunal's order, already become final ? " The assessee is a Hindu undivided family and Satinder Kumar is its karta. We are concerned with the assessment years 1968-69, 1969 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax, it appears, took the view that the assessments made on the assessee-family for the assessment years 1968-69 to 1970-71 were prejudicial to the revenue, and acting under section 263 of the Income-tax Act, 1961 he made an order dated March 20, 1972, for the three years holding that the share income of Satinder Kumar from M/s. Vijay Traders fell to be included in the assessments of the assessee-family. He relied on the circumstance that the initial return of the assessee-family for the assessment year 1968-69 showed that the assessee considered Satinder Kumar to be a partner in M/s. Vijay Traders on behalf of the family and not in his individual capacity. He also pointed out that even if the share income was to be treated as the personal income of Satinder Kumar it had been impressed with the character of Hindu undivided family property by including it in the return of the assessee-family. However, the essential basis on which he proceeded was that Satinder Kumar was a partner in M/s. Vijay Traders on behalf of the assessee-family. The assessee-family appealed to the Income-tax Appellate Tribunal. The appeals were dismissed by the Tribunal by a common order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nager or a coparcener of a joint Hindu family should be treated as ancestral. The test, it was observed, for deciding whether a business was a new business wholly unconnected with the joint family ancestral business or was an extension of that business was to determine the source which supplied the money with which the new business was started. The Patna High Court in Chandmull Rajgarhia v. Commissioner of Income-tax [1967] 66 ITR 347 (Pat) declared that if a new business was started by a member of the family the presumption would be that it was his own until otherwise proved, unless the new business was started by a sufficient nucleus from joint family assets. It would, therefore, appear that the mere circumstance that Satinder Kumar was the karta of the assessee-family and at the same time partner in M/s. Vijay Traders cannot lead to the conclusion that he represented the assessee-family in the partnership firm. There must be positive material to show that he was a partner in the firm on behalf of the assessee-family. On the Tribunal's own finding, no question arose of the assessee-family having contributed any capital to the partnership firm for the reason that there were hard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the family, the particular enterprise in question is one within the reasonable limits of its exercise or really, having regard to its nature or extent, a new speculative enterprise. " This is followed by another passage from Mulla : " When a manager of a trading joint family enters into partnership with a stranger for the purpose of carrying on the same kind of business, the other members are liable to the same extent of their interest in the family property. " The Tribunal has read these passages to mean that if the karta of a trading family engages in a business akin to that carried on already by the family it must be presumed that he carries on that business on behalf of the family. It was necessary for the Tribunal to have applied itself more closely to the import of those passages and considered what was the topic to which they related. It should have examined the several cases set out in the foot-notes for that purpose. It is unfortunate that the cases themselves were not placed before the Tribunal. Had that been done, the Tribunal would have perceived that the passages did not relate to the controversy before it. The question whether a business started by a karta c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise to no presumption that the business commenced is an extension of the family business. In the present case, Satinder Kumar is a partner in Messrs. Vijay Traders. It is true that Messrs. Vijay Traders carry on the same kind of business as Messrs. Rai Sahib Lehnu Mall Thakur Dass, and that the business is carried on in the Lower Bazar, Simla, where Messrs. Rai Sahib Lehnu Mall Thakur Dass also carry on their business. It is also true that both are partnership firms and Satinder Kumar is a partner on behalf of the family in Messrs. Rai Sahib Lehnu Mall Thakur Dass. Those circumstances do not, to my mind, lead to the conclusion that Satinder Kumar is a partner in Messrs. Vijay Traders also on behalf of the family. Some thing more is needed, and that something must be material showing that the business carried on by Satinder Kumar as partner in Messrs. Vijay Traders is in fact the business of the family. There is no evidence to show that Satinder Kumar drew on the family funds or acted to the detriment of the family assets in carrying on such business. There is no material whatever on the record indicating that Satinder Kumar was representing the family in M/s. Vijay Traders. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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