Joint family character of partitioned property governs taxability of partnership share income from family funds.

Share income from Nathmal Tolaram (Petrol Depot) was assessable in the hands of the Hindu undivided family because the governing test was the character of the property from which the partnership share arose. The business had long been treated as a joint family business, the partition documents acknowledged the business and related properties as joint family assets, and the share received by Tolaram on partition was taken as representing his branch of the family. Property received on partition does not lose its joint family character in the coparcener's hands where there is no further partition from his sons, and income derived from investment of such family funds remains family income.

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Issues: Whether the share income of Rs. 21,746 from Nathmal Tolaram (Petrol Depot) was assessable in the hands of the assessee Hindu undivided family or in the hands of Tolaram individually.

Analysis: The governing test was the character of the property from which the partnership share arose. On the facts, the business had long been treated as joint family business, the partition documents expressly acknowledged that the erstwhile business and related properties were joint family assets, and the share received by Tolaram on partition was taken by him as representing his branch of the family. Property so received on partition does not lose its character as joint family property in the hands of the coparcener where there is no further partition separating him from his sons, and income derived from investment of such family funds remains assessable as family income.

Conclusion: The share income was assessable in the hands of the assessee family and not as Tolaram's individual income.

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