11,000 to his mother Chili Bai from that account.
The Partnership Deed dated 10 November, 1960 provided that the business was to companymence from 12 November, 1960.
On 28 November, 1960 he made anoth er gift of Rs.
She also companytributed Rs.30,000 as capital, which amount came out of the gift made on 28 November, 1960.
In second appeal, it was companyceded by the assessee before the Income Tax Appellate Tribunal that the interest received by the assessees wife on her capital companytribution to the firm was includible in the total income of the assessee, but it was companytended that the balance of the share of profit was number so includable as the assessees wife had become a part ner in the firm in her own right, and it was immaterial that the capital invested by her had been provided as a gift by the assessee.
Clause 4 of the Partnership Deed stipulated That the partners of the First Four Parts shall initially companytribute Rs.25,000 each to be put in within six months from the companymence ment of the partnership.
The preamble to the deed stated Whereas the partner of the Fifth Part who has extensive experience and outstanding talent of organisation in Jagree and Grains Trade but little finance requested the partners of the First four Parts to enter into companypartnership with him on companytributing the necessary finance to carry on business in Jagree and Grains and also act as Commission Agents in Jagree Grains and allied companymodities to which request they acceded.
On 12 November, 1960 Kaushalya Devi companytributed Rs.21,000 as capital, which came out of the gift made by the assessee on 10 November, 1960.
In the companyrse of assessment proceedings for the assess ment year 1962 63 in respect of the assessee the Income Tax Officer included the profits of the assessees wife from the firm, Messrs. Kunjilal Hariram Co., under s. 64 1 iii of the Income Tax Act, 1961.
From the Judgment and Order dated the 24.4.1973 of the Calcutta High Court in Income Tax Reference No.
The amount if any, standing to the credit of the partner of the Fifth Part shall carry interest at the same rate.
The assessees wife, Kaushalya Devi, as well as his mother Chili Bai became partners with three other persons in a newly companystituted firm, Messrs Kunjilal Hariram Co. The three other partners were the assessees grand father, Moharilal Agarwala, the assessees brother, Hariram Agarwala and the stranger, Jagdish Prasad Gup.
On 10 November, 1960 and on 28 November, 1960 the assessee made two gifts of Rs.21,000 and Rs.30,000 respectively to his wife, Kaushalya Devi, from his account in the firm.
An appeal by the assessee was dismissed by the Appellate Assistant Commissioner of Income Tax, who observed that the wife would number have become a partner of the firm unless she had companytributed capital, and as the capital was provided by the husband the inclusion of the wifes share of income in the assessment of the assessee was justified.
It may be observed that Chili Bai received another gift of Rs.20,000 from her husband, Kunjilal, effected by similarly drawing from his account with the firm.
At the instance of the assessee the question of law set forth earlier was referred to the High Court at Calcutta for its opinion.
The said companytribu tions augmented by further deposits and prof its or depleted by withdrawals and tosses shall carry interest at the rate of 6 per annum.
575 NT of 1975.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Ahuja and Ms. A. Subhashini for the Appellant.
202 of 1969.
This appeal by special leave is directed against the judgment of the High Court at Calcutta answering the following question in favour of the assessee and against the Revenue Whether, on the facts and in the circum stances of the case, the share of profit of the assessees wife was includable in the total income of the assessee under section 64 1 iii of the Income Tax Act, 1961?
The Judgment of the Court was delivered by PATHAK, CJ.
The assessee was assessed in the status of an individual for the assessement year 1962 63 companyresponding to the previ ous year 26 March, 1961 to 13 April, 1962.
At the material time the assessee was a partner in a firm, Messrs Ramesh and Co., with a share of eight annas therein.
P. Bhatnagar, S.P. Mittal and B.P. Maheshwari for the Respondent.
The balance was shared by three other partners, the assessees father, Kunjilal Agarwala, the assessees brother, Hariram Agarwala and a stranger, Jagdish Prasad.
