TaxTMI 
TaxTMI 
1967 (2) TMI 29
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....das, a firm of Bombay, was the profit in the hands of the Hindu undivided family ? " The assessee, Seth Chunilal Parsram was being assessed in his capacity as karta of the Hindu undivided family consisting of himself and his three minor sons, the principal source of whose income was money-lending business. Although there was at one stage an attempt by the assessee to give it the character of a separate business carried on by him with money borrowed from the family, to the relevant details of which we shall refer presently, there is no dispute at present that the money-lending business was and continued to be, right up to the year relevant to the assessment now under reference, joint family business. The cloth business mentioned in the qu....
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....n by a member may be regarded as an acquisition made for and on behalf of the joint family. It is, of course, open to a manager of a joint family either to work on behalf of the family, or carry on business on behalf of the family and also to blend with the joint family property moneys or properties which were undoubtedly his own separate properties. But that is a matter of proof depending upon close investigation of the facts. But one circumstance which may be regarded as weighty consideration is the principle of Hindu law that, although an ancestral trade may be carried on by a manager so as to bind the interests of minor members also, it is not open to him to start a new business and expose the interests of the minor members to the ri....
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....other relating to him alone as an individual, and to the latter account he carried the full value of the gifts mentioned above, viz. Rs. 33,848.22. It would appear that at a later stage the assessee propounded a theory that the money-lending business was carried on by himself as an individual with money borrowed from the joint family and thought that the proper thing to do for him was to credit the family with interest on the moneys borrowed from the family and himself appropriate the profit arising out of the money-lending business treated as his individual business. This profit he carried to his personal or individual capital account. This theory was rejected by the income-tax department. Whether the rejection was right or wrong, the a....
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.... seems to think that the assesses has been juggling with the accounts and that his sole motive was to escape tax liability. The Tribunal, though it used milder language, seems to be of the same view. They have, however, given what appears to be a little more logical line of reasoning. They state, in our opinion rightly, that when the assessee agreed that the amount of the gifts should also be treated as belonging to the family and that the entire money-lending business was that of the family as a whole, the assessee could not assert that he had any separate funds of his own. Secondly, they state that the mere fact that the profit from the cloth business was credited to the individual capital account of the assessee cannot be regarded as con....
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...., the inference, if any, should have been in favour of the assessee and not against him. As a matter of law it should be stated that blending of private properties with those of the family is not a matter of account writing but of the intention of the acquirer. If, as the Tribunal observes, the accounting entries are inconclusive, then they cannot be accepted as to any extent modifying or qualifying the normal intention which the acquirer may be said to entertain of acquiring for himself. On the other hand, the circumstances in which the assessee came to open what is called his individual capital account clearly indicate that the said account was intended by the assessee to take in what he considered to be his separate moneys. Hence, if ....