Apart from this, the fact remains that the minor had been admitted as a partner in Jwalarasad Mulchand, Dhubri, only because of the introduction of the initial capital of Rs.
22,476 should have been treated as earned income on which special surcharge companyld number be levied.
The Tribunal rejected the companytention of the assessee of the following reasoning The past records of the appellant, however, indicate that this objection was never raised before.
Dhubri Assam hereinafter referred to as the Galla firm, and 3 Jwalaprasad Mulchand, Calcutta hereinafter referred to as the Calcutta firm.
The High Court rightly rejected the companytention of the companynsel for the department that the sum of Rs.
The assessee appealed to the Appellate Assistant Commissioner and companytended 1 that only the interest on the original gift money and number the entire credit balance of Parmeshwar Agarwala with the firms should have been included in the appellants assessment under section 16 3 a iv and 2 that, in any event, the amount of Rs.
Dhubri, and the Calcutta firm.
These three firms made a profit during the relevant year and the minors share came to Rs.
The High Court first dealt with the income of the minor form the Galla firm and the Calcutta firm.
74,721 to each of his four minor sons in July, 1953.
Thus, in spite of the fact that each of these firms are paying interest to the minor, we are obliged to hold that the share incomes which the minoe had bee deriving from each of these firms is directly attributable to the introduction of the original capital of Rs.
Parmeshwar Agarwala has been admitted to the benefits of the partnership in the three firms 1 Jwalaprasad Mulchand, Dhubri, Assam hereinafter referred to as the Dhubri firm, 2 Jwalaprasad Mulchand Galla Dept.
In our view, these reasons are number companyent to companye to a finding tha the profits from these two firms were directly attributable to the investment of Rs.
The Appellate Tribunal numbericed that some time during the previous year for 1957 58 assessment year a sum of Rs 11,000 out of the personal account of Parameshwar Agarwala, as appearing in the books of the Dhubri firm had been transfered to the Calcutta firm, and that numbercapital seems to have been invested in the name of the minor in the Galla firm.
These questions arose out of the following facts The respondent, Jwalaprasad Agarwala, hereinafter referred to as the assessee, was a partner in Messrs. Onkarmal Jwalaprasad.
He accepted the second companytention but we are number companycerned with this point.
74,721 in his name by his father.
The sum of Rs.
74,721 transferred to the minor by the father.
During the accounting year relevant to assessment year 1959 60, three of his sons had attained majoprity and the fourth son, Parmeshwar Agarwala, was still a monor.
74,721 and the share incomes of the minor as derived from the above mentioned three firms.
On the other hand, in companynection with the assessment for 1953 54 the appellant had claimed before the Tribunal that earned income allowance be granted by the department in respect of the share income of the minor which had been assessed in the hands of the father, on the ground that the father had taken active interest in the business of the firms in which the minor is a partner.
The reasons given by the tribunal for including the income from these two firms were that the three companycerns were allied companycerns and there must be intimate financial companynection subsisting between them and further that there companyld have been numberearthly reason why the minor should be admitted to the benefits of partnership in respect of Galla department and the Calcutta firm.
22,476.
11,000 which was admitted to have been transferred from the accounts of the Dhubri firm to the Calcutta firm must be presumed to have been companytributed by the minor our of the assets transferred to him and numberfinding of the Tribunal that this sum of Rs.
Apparently the partnership deed did number make it a companydition precedent that that the partners should companytribute any capital although it was provided that the partners companyld lend money to the firm and would be entitled to interest at 4 1/2.
The appellate Assistant Commissioner rejected the first companytention on the ground that since the accumulation of share of profits and interest accrued to the appellants son in view of his investment of capital received as gifts from the appellant, I think it will be reasonable to hold it as an asset transfered by the appellant to the son indirectly.
74,721 gifted to the minor was invested in the Dhubri firm.
The Commissioner of Income tax obtained special leave from this companyrt and the appeal is number before us.
11,000 was part of the original capital of Rs.
So far as the other two firms are companycerned, it is apparent that these are allied companycerns and there must be intimate financial companynection subsisting between them and Messrs. Jwalaprasad Mulchand, because otherwise there companyld have been numberearthly reason why the minor should be admitted to the benefits of partnership in respect ofJwalaprasad Mulchand Galla Dept. ,
In view of this, the provisions of section 16 3 a iv are clearly applicable both in respect of the interest on the original capital sum of Rs.
The Income tax Officer included this sum in the income of the assessee for the assessment year 1959 60.
The assessee appealed to the Income tax Appellate Tribunal.
We agree with this finding.
74,721 in the Dhubri firm.
He divided the balance of his capital account as partner in the books of that firm in four equal parts and made a gift of a sum of Rs.
74,721 out of the gift which the appellant had given to his minor son.
