TaxTMI 
TaxTMI 
1973 (12) TMI 33
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....er amount would be required, Rajendra Kumar will manage for the same. The investment by Rajendra Kumar would carry an interest at 7 1/2 per cent. per annum. Besides that, Rajendra Kumar will get Rs. 50 as rent for the shop at Budhwari Bazar, Seoni. Rajendra Kumar did not have any money of his own. The assessee provided the funds from September 3, 1958, to November 8, 1958, amounting to Rs. 22,919. Gulabchand Sohaney made no investment and he was allowed to withdraw from the partnership Rs. 100 to Rs. 125 per month for his personal and household expenses. There was also an account of the assessee, Hindu undivided family, in the books of the firm. For the assessment year 1960-61 the Income-tax Officer held the income falling to the share of Rajendra Kumar from the partnership as the income of the Hindu undivided family and taxed the same accordingly. For the following subsequent three assessment years, 1961-62, 1962-63 and 1963-64, also the share income of Rajendra Kumar from the firm was held taxable in the hands of the Hindu undivided family. The assessee remained contended after dismissal of his appeals in respect of these three years by the Appellate Assistant Commissioner. But w....
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.... this court required the Tribunal to state the case and refer the following question : " Whether, under the facts and circumstances of the case, the Tribunal was right in finding that the share income of Rs. 14,700 earned by the coparcener, Shri Rajendra Kumar, from the firm, M/s. Rajendra Medical Stores, was in law and in fact income of the Hindu undivided family of Khubchand Motilal and whether the said income was rightly included in the income of the said Hindu undivided family for purposes of taxation ? " The Tribunal has now in accordance with the aforesaid direction and the provisions of section 256(2) of the Income-tax Act, 1961, drawn up an agreed statement of the case and submitted it to this court. Before us, learned counsel for the assessee contended that there is no restriction on a coparcener for starting his own business. The family had only lent money in the ordinary course of business to Rajendra Kumar and that lending could not be construed as an investment of the Hindu undivided family. On the advance made, the Hindu undivided family was getting 7 1/2% interest and the same was declared in the return filed. He further submitted that the only conclusion po....
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....ontribution to the capital of the firm belonged to the family. Interest was payable on the capital contributed by each partner. Under clause (7) of the deed of partnership the general management and supervision of the partnership business was to be in the hands of V. Under clause (16) he was to be paid a monthly remuneration out of the gross earnings of the partnership business. The question was whether the salary received by V was assessable in the hands of the Hindu undivided family. It was found that V was in the partnership as representing the family and he became a partner on account of the investments of joint family assets in the capital of the partnership and that the remuneration received by V was only an increased share of the profits paid to him as representing the family. It was held that remuneration paid by the firm to V was directly related to the investment in the partnership business from the assets of the family. There was real and sufficient connection between the investment from the joint family funds and the remuneration paid to V. The salary paid to V was, therefore, assessable as income of the Hindu undivided family. In Raj Kumar Singh Hukam Chandji v. Commis....
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....ar ending Dewali Amount Rs. 2014 22,244 2015 35,095 2016 39,182 2017 40,187 2018 37,552 2019 35,097 This goes to show that there had been heavy investments of money by the Hindu undivided family in the partnership firm continuously for six years. There is no manner of doubt in our mind that if the Hindu undivided family had not provided the business premises and the funds, the business of M/s. Rajendra Medical Stores would not have even seen the light of day. Rajendra Kumar in his statement has stated that he had taken money from the Hindu undivided family as loan as he had no property of his own when he thought to become a partner of Rajendra Medical Stores. The Hindu undivided family firm " Singhai Khubchand Motilal " is a proprietary concern of his father, Motilalji. No partition has taken place. He further admitted that he did not receive any interest on the capital which was taken on loan from the Hindu undivided family and it carried interest at the rate of 10 annas per 100 rupees per month. While Motilal, the karta of the Hindu undivided family and father of Rajendra Kumar, has in his statement clearly stated that he did not give money to Rajendra Kum....