TMI Blog1973 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... epresented by its karta, E.A.E.T.Sundararaj. The Hindu undivided family is carrying on business both in the purchase and sale of raw materials and in the manufacture and sale of fire-works under the name and style of Prithivi Fire Works Industries. For the previous year ending on February 6, 1960, relevant for the assessment year 1960-61, the assessee returned an income of Rs. 15,853 from the said business. A return of income for the same assessment year for which the previous year was the year ended on March 31, 1960, was filed by a firm, E.A.E.T. Sundararaj and Co., disclosing an income of Rs. 7,381. The Income-tax Officer treated the said firm as benami for the family, and treated the net income of Rs. 5,805 returned by the firm as income of the Hindu undivided family headed by the said Sundararaj. The assessee objected to the inclusion of the income of the firm with the income of the Hindu undivided family. Aggrieved against the inclusion of the income of the firm with the income of the Hindu undivided family, the assessee filed an appeal before the Appellate Assistant Commissioner, who, however, accepted the assessee's case and held that there was no justification for clubbing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The firm has been constituted with the wives of the two coparceners, and the business of that firm is said to be purchase and sale of raw materials for the fire-works which is also the line of business carried on by the family. The assessment of this firm was taken up for the first time for the assessment year 1960-61. Before the Income-tax Officer, it was contended that the firm is an independent entity, having nothing to do with the Hindu undivided family, that, therefore, the inclusion of the firm's income in the income of the Hindu undivided family was not justified and that there was no justification for the view that the firm is not a genuine one but benami for the Hindu undivided family. At the stage of the assessment, the Income-Officer investigated the question of genuineness of the firm. He recorded sworn statements from the two partners. Ultimately, he came to the conclusion that the firm was not genuine and that the business of the firm actually belonged to the assessee-family. The facts and circumstances taken by the Income-tax Officer for coming to that conclusion are these: (i) The two partners of the firm were the wife of the karta of the Hindu undivided fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed by the Hindu undivided family, there was also no evidence that the profits of the firm were enjoyed by the ladies. According to the Tribunal, the business run by the firm is in the same line as the business run by the Hindu undivided family. As already stated, the Hindu undivided family is also carrying on business in raw materials for the manufacture of fire works, and, therefore, it is quite improbable that the joint family would have genuinely brought into existence a firm to carry on the same business and practically in the same premises. The view of the Tribunal is that there is absolutely no reason for the wives of the members of the Hindu undivided family to start a rival business unless the business run by the firm is for the benefit of the Hindu undivided family. We are unable to say that this reasoning of the Tribunal is, in any way, vitiated. As the Tribunal points out, it is quite unlikely that the Hindu undivided family would have allowed a rival firm to start the same line of business within the same premises, unless the business run by the firm is also for its benefit. In fact, the partners have not brought in their capital in the first instance. They are suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the other individual items of receipts shown in the accounts. We have not been shown any entry of withdrawal by the partners as relating to their share of the profits. The learned counsel for the assessee refers to the decision in Madura Knitting Company v. Commissioner of Income-tax and contends that the proper test to find out whether a particular firm is benami or not is to find out as to who is the beneficial owner of the profits earned by the firm. In this case, the Tribunal has also applied this test and has stated that it has not been shown that the partners in fact had the benefit of the profits earned by the firm. The learned counsel also refers to the decision of this court in S. S. A. Gangamrithammal Co. v. Commissioner of Income-tax and submits that the principles laid down in that case have not been kept in view by the Tribunal. But, we are of the view that the decision in that case has to be confined to the facts found therein. It is also pointed out by the learned counsel that the firm has been registered under the Partnership Act and that it has also been assessed as a separate entity by the sales tax authorities and that these facts show that the firm shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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