as also a right to become a full fledged partner on, his attaining majority.
Under this new deed each one, of the, three minor sons of Yudhisthir Lal was given 14 share in the profits of the firm.
It was claimed that with effect from December 19, 1967 the Hindu Undivided Family of which her husband Was the Karta and after whose death she was man aging the affairs had numberinterest in the said firm and that her three minor sons were admitted to the benefits of partnership in their individual and personal capacity as agreed to between the three surviving partners of that firm and, therefore, the share income of the firm received by her three minor sons for the period December 19, 1967 to August 31, 1968 amounting to Rs.
Bhagwati Devi Agarwalla filed the return on behalf of Hindu Undivided Family disclosing the share income from the firm of Grand Smithy Works for the period from September 1, 1967 to December 18, 1967 only i.e. up to the date when her husband was alive and was a partner in that firm.
Appeal by Special Leave from the Judgment and Order dated 23 3 76 of the Calcutta High Court in I.T.R. No.
In the first place he urged that when a minor was admitted to the benefits of a partnership his share of profits of firm would be his individual income unless it was shown by the Department that in the firm he was really a benamidar or numberinee of the Hindu Undivided Family of which he was a member and in that behalf relying upon three undisputed circumstances it was urged that the Department had failed to discharge that burden.
for instance, Dhanwateys 2 case and Raj Kumar 1 case companyld have numberrelevance to the case of a minor admitted to the benefits of partnership.
On appeal, the Appellate Assistant Commissioner, by his.
It was further companytended that there was numberfinding recorded by the Tribunal that there was any agreement between the surviving partners and anyone on behalf of the heirs of deceased Yudhisthir Lal to the effect that the Hindu Undivided Family was to companytinue to be the real owner of the shares given to the minors number was there any evidence to that effect and since the burden of proving any such transaction was on the Department which the Department had failed to discharge, the Tribunal as well as the High Court had wrongly companye to the companyclusion that the shares allocated to the three minors companystituted the income of the Hindu Un divided Family and was assessable as such in the bands of the Hindu divided Family.
of the deceased or retiring partner without siders also.
According to him the decisions on the subject of renimuneration, companymission, fees or salaries earned by a Karta and other members of a Hindu Undivided Family such as.
Since Yudhisthir Lal died on December 18, 1967 i.e. before the expiry of the year of account of the firm which was from 1 9 1967 to 31 8 1968, the firm closed its accounts on December 18, 1967 and the surviving partners after admitting the three minor sons to the benefits thereof companytinued to carry on the business of the partnership with effect from December 19, 1967 and a new deed of partnership was executed by the surviving partners on January 11, 1968 the terms and companyditions whereof were made effective from December 19, 1967.
In spite of these three circumstances the Tribunal had, companynsel companytended, wrongly held that the minors were either the, benamidars or numberinees of the Hindu Undivided Family and that, therefore, the share income allocated to them was of the Hindu Undivided, Family.
His share in that firm was 36.
Under clause 13 of the Partnership Deed dated September 20, 1961, pursuant to which the said firm used to carry on its business, it was provided that the death or retirement of any of the partners shall number have the effect of dissolving this companypartnership in such an eventuality the companypartnership.business may be carried on between the surviving partners and the heirs legal representatives of the deceased and of retiring partner or if mutually agreed upon between the surviving partners and heirs etc.
The Judgment of the Court was delivered by TULZAPURKAR, J, This appeal by special leave raises an important question as to whether the sum of Rs.
V. Gupte, Attorney General, R. N. Sachthey, K. C. Dua and Miss A. Subhashini for the Respondent.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The facts giving rise to the question may briefly be stated as follows One Yudhisthir Lal Agarwalla, since deceased, was the Karta of a Hindu Undivided Family known as M s Y. L. Agarwalla Co. the Assessee herein .
Bhagwati Devi, six daughters three married and three unmarried out of whom two were minors and three minor sons.
Yudhisthir Lal died on December 18, 1967 leaving behind him his widow Smt.
the benefits of the partnership.
Bhagwati Devi and the four major daughters declined to exercise the option reserved to them under clause 13 of the deed and refused to join the partnership business however, the three minor sons were admitted to.
3,08,187, being the share income of three minor sons from the firm of M s. Grand Smithy Works for the period from 19 12 1967 to 31 8 1968 is liable to be assessed as the income of the Hindu Undivided Family M s. Y. L. Agarwalla Company for the assessment year 1969 70 ?
During his life time in his capacity as the Karta of the said Hindu Undivided Family he carried on business in partnership with three others Shiv Charan Lal, Ram Gopal Garodia and Tula Ram Budhia in the name and style of M s. Grand Smithy Works.
T. Desai, V. D. Desai, Sanjay Bhattacharya, P. K. Dhar, Sardar Amzad Ali and Rathin Das for the Appellant.
1112 of 1976.
In the first place it was pointed out that the Department bad never doubted the genuineness or bona fides of the transaction of the admission of the three minor sons of Yudhisthir Lal to the benefits of the Partnership of M s. Grand Smithy Works with effect from December 19, 1967 under the new deed of partnership dated January 11, 1968 it was further pointed out that the said three minors did number and companyld number in law represent the Hindu Undivided Family in the firm and thirdly, it was pointed out that the minors had been admitted to the benefits of the partnership after Smt Bhagwati Devi on behalf of the Hindu Undivided Family and the four major daughters had by their letters of disclaimer dated January 11, 1968 refused to have any companynection with the partnership business.
The assessee carried the matter in further appeal to the Appellate 1063 Tribunal but the Tribunal also dismissed the appeal.
By two letters both dated January 11, 1968, one addressed by the widow on behalf of herself and the Hindu Undivided Family and 1062 the other by the four major daughters, Smt.
order dated March 24, 1971, companyfirmed the view of the Income Tax Officer.
3,08,187, companyld number be included in the income of the Hindu Undivided Family and assessed as such.
The Income Tax Officer negatived that companytention he numbericed that in spite of the two letters of disclaimer addressed to the surviving partners, the three minor sons of late Yudhisthir Lal Agarwalla had been admitted to the benefits of the partnership with companylective shares of 42 which was more than what their father was holding at the time of his death and further that the.
Hindu Undivided, Family had number charged any interest on its capital amount which was permitted to lie with the firm for which numberexplanation bad been offered by the assessee.
206 of 1973.
For the assessment year 1969 70, the relevant accounting period being 1 9 1967 to 31 8 1968 Smt.
Clause 6 of the deed ensured to the firm the continued use of the capital of Hindu Undivided Family standing in the account of late Yudhisthir Lal free of interest.
