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TMI Blog1960 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... sixteen other branches of the bank. As treasurer, he furnished security to the bank of certain properties of the Hindu undivided family, which consisted of title deeds of immovable properties in Chandni Chowk, Delhi, and Government of India securities of the value of Rs. 75,000. The Hindu undivided family owns considerable property. Its income from house property alone is Rs. 50,000 per annum and it owns stocks, shares and Government securities also of considerable value. As treasurer, Sheel Chandra received in the year of account from the bank a sum of Rs. 23,286 and the question for decision is whether this sum is the individual income of Sheel Chandra as salary or it is part of the income of the Hindu undivided family. The Income-tax authorities held this sum to be the latter and taxed it as such. The Income-tax Appellate Tribunal in upholding this view held that on a proper construction of the written agreement between Sheel Chandra and the bank, the emoluments received by the treasurer were profits and gains of business and it further held that as the security furnished by Sheel Chandra came out of the joint family properties, the emoluments could not be said to have been ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teed peons, godown keepers, assistant godown keepers, chowkidars and clerks and other persons necessary for the efficient working of the said offices. He had the power to " control, dismiss and change " this staff at his pleasure but he could not engage or transfer any member of the staff except with the approval of the bank and had to dismiss any such member if so required by the managing director of the bank or agent of the office. The treasurer and the cash department staff were to, do and be responsible for all work in connection with receipts and payments of monies and had to do such other work as was customarily done by cashiers and shroffs of banks. The treasurer was also responsible for the correctness and genuineness of all hundies and cheques bearing signatures and endorsements in vernacular and for genuineness of all signatures and writings in any language or character or any securities, voucher deeds, documents and writings which the treasurer or the cash department staff dealt with and in case of any loss or damage arising out of any forged signatures and endorsements on any document accepted or dealt with by the cash department staff as correct and genuine, the trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilway fare. The various members of the cash department staff were to be paid their salary directly by the bank but the bank was not bound to pay more than the scale laid down by it. The permanent members of the cash department staff were to get the usual increments and benefit of provident fund and travelling allowance in accordance with the rules of the bank. The treasurer was required to engage members of the cash staff on salaries laid down by the bank and if he paid anything more than the usual bank scale he had to pay it himself. The treasurer was also entitled to nominate and appoint a representative to carry on the duties undertaken by him at the various offices of the bank but these appointments were subject to the approval of the bank. The treasurer was responsible for the acts of omission and commission and for neglect and default of his representatives and for each and every member of the cash department staff. There are various clauses in the agreement requiring the treasurer or his representative to perform their duties efficiently, honestly and in a proper manner. The treasurer and the cash department staff were under the control of the bank. They were required to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he duties of Sheel Chandra under the agreement are such as are peculiar to the employment of treasurers. It is true that as treasurer, Sheel Chandra had also undertaken to indemnify the bank not only for his own default but also for the default of the members of the cash department staff. But banks have to deal with monies, valuable securities, gold and other valuables and must necessarily employ servants whose honesty is guaranteed and it is necessary for the bank to have some one in its employment who can perform these duties in a responsible manner and be answerable to the bank for negligence and default in the performance of this class of work. In the very nature of things one man cannot do all this work, not even at one branch, what to say of several branches ; other people have therefore to be employed and although the persons employed in the cash department are servants of the bank do the work which treasurers ordinarily and customarily do and consequently the treasurer is made responsible for any damage which the bank suffers due to the default of the treasurer or of those employed to do the work of the cash department. It is difficult to lay down any one test to distingu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss in detail the various cases that were cited at the Bar. Bhargava v. Commissioner of Income-tax was the case of a treasurer of the Central Bank of India at Agra. There he was paid a salary of Rs. 100 and a commission for his work as a guarantee Commission agent but the terms of the contract were different and that was clearly a case of a guarantee commission agency. Lala Jeewan Lal v. Commissioner of Income-tax was also a case of commission agency and in the peculiar circumstances of that case it was held to be business within section 2(5) of the Excess Profits Tax Act. The assessee there was paid a commission of 4 annas per cent. on the value of the contracts secured by him. Subsequently the commission was increased to Re. 1 per cent. and for this extra commission he agreed to reimburse the mill in case of failure of a person purchasing through him to pay the price. Counsel for the respondent also relied on Commissioner of Income-tax v. Kalu Babu Lal Chand where the managing director's remuneration was held to be the income of a joint family to be assessed as such in its hands. That case is distinguishable. There the karta of a Hindu undivided family took over a business as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Chand Nath Mal and Commissioner of Income-tax v. Kalu Babu Lal Chand. In the former case a member of a joint family entered the civil service and that was made possible by the expenditure of family funds which enabled him to acquire the necessary qualifications and it was that fact which made his earnings part of the family income. The following passage in that judgment at page 168 was emphasized : " It may be said to be direct in the one case and remote in the other, but if risk of or detriment to family property is the point in both cases, there appears to be no such merit in ' science ', recognised by the sages of the Hindu law, as would warrant the exclusion of gains of science as such from the category of partible acquisitions." Counsel particularly relied on the words " risk of " and contended that by reason of the family property being given in security, the risk as understood in that judgment had arisen ; because it became liable for any loss that might be incurred during the course of employment of Sheel Chandra. The word " risk " in that judgment must be read in the context in which it was used. Family estate was used and expenditure was incurred for equipping one o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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