9911796707
TMI Blog1974 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... brother, Mathuradas, in the name and style of Chandravadan Co. some time in August, 1953, and the terms of the partnership were reduced to writing by a partnership deed dated July 24, 1954. In this partnership the assessee, Bhaichand, was entitled and liable to bear 10 annas share in the profits and losses, while his brother, Mathuradas, was entitled and liable to bear 6 annas share in the profits and losses. There was no term in the deed of partnership relating to ownership of goodwill and tenancy rights of the premises where the partnership business was carried on. The assessee retired from this partnership with effect from October 23, 1957. A deed of retirement was actually drawn up between the parties on April 11, 1958. With effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the other parties. Upon the dissolution of the new firm, Tarabai was entitled to take over the godown and the shop but she was liable to pay to the partnership the value thereof. So far as the firm name was concerned, she was entitled thereto upon dissolution without paying any amount to the partnership. On May 7, 1957, and August 21, 1958, the assessee gifted two sums of Rs. 50,000 each to his wife, Tarabai. She first deposited the amount in her bank account with the Union Bank of India and thereafter withdrew the said amount and invested it in the new firm is and by way of her capital contribution. For the assessment year 1959-60, for which the accounting year was Samvat year 2014, Tarabai was credited with a sum of Rs. 2,633 as and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was advanced as regards the quantum of the said amount that should be included in the total income. This alternative contention was rejected by the Tribunal and ultimately the order passed by the Income-tax Officer was confirmed. On these facts the question referred for our determination is as under: " Whether, on the facts and in the circumstances of the case, the inclusion of Rs. 31,778 in the total income of the assessee under section 16(3)(a)(iii) is justified ? " Even though the question referred to us related to the total sum of Rs. 31,778, Mr. Pandit on behalf of the assessee has fairly conceded that a sum of Rs. 6,000 being the interest on the capital amount of Rs. 1 lakh contributed by wife, Tarabai, in the firm should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection with an agreement to live apart; ..........." It is not disputed on behalf of the assessee that a sum of Rs. 1 lakh was contributed by the wife, Tarabai, in the new firm from the two sums gifted by the husband to her, but even apart from this sum of Rs. 1 lakh there was an additional capital contribution made by the wife and the argument of Mr. Pandit is that interest attributable to this additional contribution of capital by the wife and her share of profit can never be regarded as includible in the total income of the assessee, her husband. The effect of the provisions of section 16(3)(a)(iii) came to be considered by the Supreme Court in the above case of Prem Bhai Parekh and the Supreme Court has pointed out that section 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the transfer of the assets. The income arising to the three minor sons of the assessee by virtue of their admission to the benefits of partnership in the firm could not be included in the total income of the assessee. It appears clearly from this judgment that the three minor sons were admitted to the benefits of the partnership because they contributed a sum of Rs. 75,000 each as capital of the firm and this capital contribution was made out of the moneys gifted by their father. None the less the amount coming to the share of these three minors by way of profit was not treated as income to be computed in the total income of their father. The ratio of this case directly applies in the present case. The direct nexus exists only between t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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