TaxTMI 
TaxTMI 
1954 (2) TMI 20
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....imraj (father), Janki Devi (mother), and five sons Atma Ram, Chiranjilal Sawarmal, Prabhu Dayal and Jagdish. 2. On 30-6-1946 a new business-under the same name of Bhimraj Bansidhar was started in the first instance with the four major sons as partners of the firm. A deed of partnership was executed by the four sons, Chiranjilal, Atma Ram, Sawarmal and Parbhu Dayal on 3-9-1946, indicating therein that the partnership was formed with retrospective effect from 30-6-1946. This agreement was varied by a second deed of partnership dated 30-10-1946, by which the benefits of the partnership were extended to the minor son Jagdish. For the assessment year 1948-49, the Hindu undivided family filed a return showing an income of ₹ 2612/- and odd.....
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....e appeals were dismissed with slight modification and the decision of the Appellate Assistant Commissioner was affirmed as regards the quantum of assessment upon the Hindu undivided family and as regards the refusal to register the partnership under Section 26A, Income Tax Act. 3. At the instance of the High Court the Income Tax Appellate Tribunal has referred the following question of law under Section 66(2), Income Tax Act: "On the facts and circumstances found, did the entries in the books of account dated 29-6-1946, and the deeds of partnership executed on 3-9-1946 and 30-10-1946, constitute in law a disruption of the joint family status in respect of business and bring into existence a partnership firm entitled to registration ....
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....ided into seven shares and personal accounts were opened for the seven family members and a sum of ₹ 33756/- was credited to the account of each of the seven members. The Appellate Tribunal has said that the book balances were simply brought down from the old folios to the new folios and, therefore, some suspicion must be attached to the transaction. There is no point in this observation for the only method by which a business can be divided as a going concern is by dividing the book balances in the names of persons to whom the shares of business have been allotted. A partition may be brought about by mere specification of the shares in the accounts and making entries therein to show that business is held in severally or in specified....
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....it members of an undivided Hindu family from entering into a partnership in respect of a portion of the joint property which they have partitioned among themselves. That is the new law laid down by the Judicial Committee in -- 'Sunder Singh Majithia v. Commr. of Income Tax, C. P. and U. P.' AIR 1942 PC 57 (C). The facts of the present case are closely parallel to the case referred to. The joint family was not completely disrupted but its entity continued to exist for the assessment year 1948-49. The case of the assessee is that there was only partial partition of the assets of the Hindu undivided family and the cloth business was divided between the seven coparceners five of whom constituted themselves into a partnership and took ov....
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....ent from the fact that in the two letters written by the Bengal Central Bank and the Bharat Bank (see pages 38-39 of the paper-book) there is no statement that the father operated the respective bank accounts even after the partnership was constituted on 29-6-1946. 6. The Income Tax Appellate Tribunal have also stated that "the book debts have not been properly assigned by notice to the debtors, nor the Victory Bonds transferred by endorsement and delivery nor the electricity deposit by proper application to the electric Company for transfer." As regards book debts, we do not think that any assignment to the partnership is required as a matter of law. The question of endorsement of the Victory Bonds could only arise at the tim....