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TMI Blog1978 (4) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner in the aforesaid four firms representing his HUF is borne out by the assessment order for the asst. yrs. 1952-53 and 1953-54 dated 24th Nov., 1952 and 30th Sept., 1953 at page 41 to 44 of the assessee's paper-book-A. The HUF of Shri Suraj Mal had some immovable properties also. 3. By an agreement dated 18th Oct., 1952 (Kartika Badi 15 Samwat 2009), there was a partial partition of the assets of the family of Shri Suraj Mal which at that time had four coparceners, namely, Suraj Mal (father), Devki Nandan, Ambika Parshad and Swayam Parkash (sons). The assets which were the subject matter of partition were shares which Suraj Mal had in the aforesaid four firms and the capital liability of Rs. 1,16,651-7 annas which was ascertained on the date of the partial partition. A copy of the account of Suraj Mal in the books of M/s. Nand Ram Daulat Ram, Sirsa (Head Office), which gives the details as to how the sum or Rs. 1,16,651-7 annas was ascertained, is as under: "Dr . Cr. . To Opening balance 1,74,271-8-9 By property-tax 697-14-0 To amt trf. From Nand Ram Daulat Ram Saltpetre. 6,116-15-0 Nand Ram Daulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed return declaring income from the aforesaid four firms at Rs. 11,218 and claimed his status as HUF, The ITO made the assessment under s. 143(1) on 22nd Oct., 1971 and determined the total income at Rs. 31,050. Even though the said assessment was purported to have been made under s.143(1), the ITO included a sum of Rs. 13,800 in the said assessment (Rs. 13,800 in the said assessment (Rs.13,200 being remuneration received by Ambika Parshad from M/s. Amar Flour Mills (P) Ltd., Sirsa and Rs. 600 received by him on account of meeting fee) even though that amount had not been declared as the income of the HUF. 6. The assessment was reopened under s. 143(2)(B), after obtaining the approval of the IAC. Thereafter, Ambika Parshad filed a return on 14th March, 1972 in his individual capacity declaring income at Rs. 15,000. This amount included salary income from M/s. Amar Flour Mills (P) Ltd., Sirsa and also income from meeting fee. 7. During the course of reassessment proceedings, the assessee's claim was that the income from the aforesaid four firms should be taxed as the income of his HUF. The submission made was that in the past, the assessee had wrongly returned the income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of Rs. 14,400 the AAC held that amount was the individual income of Ambika Parshad. He thus deleted the salary income of Rs. 14,400 from the present assessment. The revenue is aggrieved against the said order of the AAC. 9. The learned Departmental Representative submitted that the judgment in the case of Rohsan Di Hatti (2) and Ridhkaran (1) were not relevant. He did not dispute the partial partition of the assets of the family of Suraj Mal but peladed that when Ambika Parshad had only received a liability of Rs. 29,161, 13 annas and 9 pies, it should not have been held by the AAC that in the four firms in question he became a partner in his representative capacity, representing his HUF. He did not dispute the principle that res judicata did not apply to the Income-tax proceedings but he wanted us to consider the effect of the assessee's own declaration in various years that his income from the aforesaid four firms was his individual income. He referred to Articles 220 and 228 of Mulla's Hindu Law declining with classification of property jointly acquired. The point that he made was that when there was no property of the HUF, the share income earned from the four firms shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k, which includes two assets car, worth Rs. 7,560 and truck Rs. 1,500 and (iv) balance-sheet of M/s. Nand Ram Daulat Ram, Ice Gramdall Factory, Sirs as on 18th Oct.,, 1952, page 13 of the paper-book which includes two assets one under the head "Machinery Account" Rs. 39,454,8 annas and second under the head "Building" Rs. 20,500. The point that he made out was that when the debit balance of Rs. 29,161, 13 annas and 9 pies was allotted in the partial partition to each coparcener, the aforesaid sums shown in the different balance-sheets were not valued. If these assets had been valued, the debit balance allotted to each coparcener might have either been wiped out or reduced. He also furnished a list of properties of Suraj Mal Biyani, HUF, as on 18th Oct.,, 1952 page 14 of the paper-book which were not partitioned. A copy of the WT assessment order dated 18th Feb., 1970 in respect of the asst. yr. 1969-70 of M/s. Suraj Mal Sons (HUF), page 16 of the supplementary paper-book was filed to show that the family of Suraj Mal still had substantial immovable assets. He referred to the Patna High Court judgement in the case of Bhimraj Bansidhar vs. C.I.T(11) and submitted that the only me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of Ambika Parshad from M/s. Amar Flour Mills (P) Ltd., Sirsa, had been rightly held by the AAC to be the individual income of Ambika Parshad. Out of the total share holding of 9008 shares of Amar Flour Mills (P) Ltd., Sirsa, the share holding of Ambika Parshad was only 304 shares which worked out to 3.3per cent of the total share holding. A list of the share holders was filed to show that there were ten other persons who were having more share than the share holding of Ambika Parshad. Ambika Parshad was appointed as a Managing Director by the Board's resolution passed on 7th July, 1967 on a salary of Rs. 1,200 per month. By a resolution dated 3rd Sept., 1964, Ambika Parshad's resignation was accepted with effect from 1st Sept., 1964. He was, however, re appointed by a resolution dated 30th Sept., 1964 effective from 1st Oct., 1964 on a salary of Rs.1,200 per month. Ambika Parshad had filed an affidavit before the AAC deposing that he was appointed as a Managing Director because of his personal qualification and not because of his insignificant investment of his H.U.F. a reference was made to the Supreme Court judgment in the case of Raj Kumar Singh Hukam Chandji vs. CIT(15) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of this case, we have no doubt that Ambikha Parshad became a partner in the aforesaid four concerns in his capacity as a HUF because the share which was allotted to him in the four different firms was received by him from out of the share of Suraj Mal who was a partner in the four different firms. As stated by the Patna High Court in the case of Bhimraj Bansidhar vs CIT (11) the only method by which a business can be divided as a going concern is by dividing the book balances in the names of persons to whom the shares of the business have been allotted. The case in M/s. Tulsi Dal Mills, Agr (12) goes a step further and lays down that a partial partition can be validly effected when the business is divided by dividing the debit balance in the capital account. In Kishore Lal Sunder lal (13) case only the assets of the business were divided leaving the liabilities to be discharged by the family itself and from the said judgement it would thus be apparent that the partial partition can be either of the assets or of the liabilities of the business. In the present case when there was a partial partition of the assets of the family of Suraj Mal, the only method available for partitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that of Ambikha Parshad had been taxed in the status of HUF. A copy of the assessment order dt. 1st May, 1970 for the asst. yr. 1968-69 page 50 of the paper book in the case of Swayam Parkash has also been filed to show that in respect of certain shares from certain firms, he has also been assessed in the status of HUF. In exactly similar circumstances, there is no reason to treat the assessee differently from brothers so far as the status in respect of the share income from the four firms is concerned. 13. The other point for consideration is whether the salary income of Ambikha Parshad is individual income or the income of his HUF. The total shares of M/s Amar Flour Mills (P) Ltd., Sirsa are 9008 and the share holding of Ambikha Parshad's family is only 304 which works out to 3.3per cent. we have examined the list of share holding, page six of the paper-book and find that there are at least 10 other persons whose share holding is more than the share holding of Ambikha Parshad Biyani. After considering the principle laid down by the Supreme Court in the case of Raj Kumar Singh Hukam Chandji vs CIT (15) we do not have the slightest doubt that the salary income of Ambikha Parsh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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