TaxTMI 
TaxTMI 
TaxTMI 
1959 (5) TMI 59
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....4, and that each of his four sons shall be separate owner of the property of the value of ₹ 5,60,000. The property which fell to the share of S. Bhagwant Singh is as follows: 1. Half share in the Regal Buildings valued at ... ₹ 8,00,000 2. Kothi No. 7, Prithviraj Road, New Delhi, valued at ... ₹ 1,40,000 Total ... ₹ 9,40,000 Less debts to be paid by him falling to his share amounting to ... ₹ 3,80,000 Net value falling to his share ... ₹ 5,60,000 A formal deed of partition relating to the movable and immovable properties, securities, assets and liabilities was executed on the 9th June 1947. In November, 1947, S. Bhagwant Singh sold the property known as No. 7. Prithviraj Road, New Delhi, for a sum of ₹ 6,00,000, and invested a part of the proceeds thereof (over ₹ 1,50,000), as his capital contribution in a new partnership concern known as Sir Sobha Singh and Company (Builders), Nagpur, which was constituted on the 11th Decem- ber, 1947. He was to have a 6 anna share in the partnership business and was to be paid a sum of ₹ 1,500 per mensem as his remuneration. On the 31st August, 1951, S. Bhagwant Singh fi....
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....ily property belonged to S. Bhagwant Singh in his individual capacity? (2) Whether on the facts and in the circumstances of this case the share of S. Bhagwant Singh in the profits of the firm styled as Sir Sobha Singh and Company (Builders), Nagpur, belonged to S. Bhagwant Singh in his individual capacity? (3) Whether on the facts and in the circumstances of this case the salary of ₹ 1,500 per mensem received by S. Bhagwant Singh from the firm styled as Sir Sobha Singh and Company (Builders), Nagpur, was income of S. Bhagwant Singh in his individual capacity?" The Commissioner of Income-tax suggested that Question No. 1 may be referred as follows: "Whether on the facts and in the circumstances of the case the House No. 7, Prithiviraj Road then valued ₹ 1,40,000, and alleged to have been to S. Bhagwant Singh by his father as an extra share on the partition of the family property, belonged to S. Bhagwant Singh in his individual capacity?" The Tribunal did not consider it necessary to reframe question No. 1 on the lines indicated by the Commissioner of Income-tax. The circumstances in which the property known as 7, Prithviraj Road (valued at ₹ 1,....
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....on. A number of circumstances militate against the assertion that Sir Sobha Singh transferred the Prithviraj Road House to S. Bhagwant Singh in his individual capacity either for services rendered to the family or for some other reasons. In the first place, the family of which Sir Sobha Singh was the karta disrupted on or before the 31st March, 1947, and the entire property belonging to the joint family was distributed among and several coparceners. If Sir Sobha Singh ceased to be karta of joint Hindu family by reason of this partition and if the property of 31st March, 1947, he had no power after that date to transfer the Prithviraj Road House to S. Bhagwant Singh without the consent of the sons of S. Bhagwant Singh and without payment of any compensa- tion to the family which was deprived of property of the value of ₹ 6,00,000. Secondly, Sir Sobha Singh had no power to transfer this property to S. Bhagwant Singh by way of gift, for under the Hindu law a father has no power of making gift of immovable property except for pious purposes. Even gifts of ancestral movable property can be made within reasonable limits. Thirdly, it is significant that although the house was actua....
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....on the facts and in the circum- stances of this case the share of S. Bhagwant Singh in the profits of the firm styled as Sir Sobha Singh and Company (Builders), Nagpur, belonged to S. Bhagwant Singh in his individual capacity? This ques- tion must be answered in favour of the Department. It is common ground that S. Bhagwant Singh sold the Prithviraj Road house for a sum of ₹ 6,00,000 and invested a sum of ₹ 1,50,000 from the pro- ceeds of this house in the partnership concern at Nagpur. If the money which was invested in the firm at Nagpur was the property of the joint family headed by S. Bhagwant Singh, it is obvious that the share of S. Bhagwant Singh in the profits of the firm could not belong to S. Bhagwant Singh in his individual capacity. It is settled law that the income of a member of a joint family is joint family property if it has been earned at the expense of the joint family property. This brings me to the consideration of the third question propounded by the Tribunal, namely, whether the salary of ₹ 1,500 per mensem received by S. Bhagwant Singh for the firm styled as Sir Sobha Singh and Company (Builders), Nagpur, was the income of S. Bhagwant Sing....
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....ration for his services other than the share of the profits to which he is entitled under the terms of his contract. In the absence of a stipula- tion to the contrary, a partner is entitled to nothing extra for any in- equality of services rendered by him as compared with those rendered by his co-partners. Unequal services are presumed to have been rendered without expectation of reward. This conclusion flows from the principle that as each partner is clothed with all the powers of the firm, each is burdened with all the duties of it. While managing the affairs of the partnership business the partner is also attending to his own interest therein as well as to the interest of his partners. Indeed, the very nature of the contract of partnership precludes a court from embarking upon an investigation whether one of the partners per- formed duties more onerous than those performed by another, whether the labours of one partner were of a more valuable or profitable character than those of another. In Caldwell v. Leiber 7 Page 483, Vice Chancellor Willard made certain observations which are as weighty as they are clear. He said: "Where there is no special agreement to that effect, p....
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....is claimed. If, therefore, a partnership agreement expressly provides that a partner is entitled to receive monthly salary or if such partnership agreement is silent, but an agreement that he shall be paid for his services can be fully and justly implied from the course of business between the partners, he is enabled to recover. The legal position has been summarised in the following passages which appear at page 480 of Lindley's treatise on Partnership. The learned author observes: "Under the ordinary circumstances the contract of partnership excludes any implied contract for payment of services rendered for the firm by any of its members. Consequently, in the absence of an agree- ment to that effect, one partner cannot charge his co-partners with any sum for compensation, whether in the shape of salary, commission or otherwise, on account of his own trouble in conducting the partnership business....And even where the amount of services rendered by the partners is exceedingly unequal, still, if there is no agreement that their services shall be remunerated, no charge in respect of them can be allowed in taking the partnership accounts." The principle propounded abo....
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....rsonal qualifica- tions and in consideration of the services rendered by him to the partnership. He contends further that no joint family property was spent in earning this salary, that the joint family continued to obtain its legitimate share from the income of the partnership, and that there was no detriment to the joint family property, in somewhat similar circumstances it is argued, the courts have held that the remuneration paid to a member of a joint family was his personal income and not the income of the joint family: Sirdar Bahadur Indra Singh v. Commissioner of Income-tax([1943] 11 I.T.R. 16); Jitumal Chamanlal v. Commissioner of Income-tax([1944] 12 I.T.R. 296); Commissioner of Income-tax v. Jainarain Jagannath([1945] 13 I.T.R. 410) Commissioner of; Income-tax v. Darsanram([1945] 13 I.T.R. 419); Commissioner of Income-tax v. Sankaralinga; Iyer([1950] 18 I.T.R. 194); Knightsdale Estate v. Commissioner of Income-tax([1955] 28 I.T.R. 650); and Kalu Babu Lalchand v. Commissioner of Income-tax([1956] 29 I.T.R. 281). It is accordingly submitted that the income of ₹ 1,500 per mensem claimed by S. Bhagwant Singh was earned by him by his own exertions and without the aid of....