TMI Blog1947 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... family in his individual capacity, on the other? This question was decided by the High Court in the negative― thereby reversing the decision of the Tribunal dated 8th September, 1942. A Hindu named Tulsi Ram had two sons, Chunilal and Lachhman Das (the appellant). Chunilal had three sons and Lachhman Das had seven sons, two of whom were named Daulat Ram and Kanhaya Lal. Shortly before his death in 1930 Tulsi Ram made a gift of ₹ 30,000 to Daulat Ram. Daulat Ram deposited this sum at interest with the firm of the joint family carried on by Chunilal and Lachhman Das. The family was governed by the Mitakshara law. In or about 1938, a partition took place between Chunilal and his sons on the one hand and Lachhman Das and his sons on the other. Lachhman Das and his sons, however, remained joint. Daulat Ram was repaid his deposit, which, with interest, had increased to ₹ 48,000, and this sum he invested in certain mills called the Indian Woollen Textile Mills. It is undisputed that this sum was his separate property. It has been found as a fact by the Tribunal and that question is not now before this Board that the mills were the property of a partnership cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investments of the family and the interest derived on their capital were systematically discriminated from those belonging to Daulat Ram. The Tribunal then referred to certain authorities and distinguished some of them from the case before them, holding in the result, that the mills belonged to a partnership consisting of the joint family of the one part and Daulat Ram, in his individual capacity, of the other part and that it was competent for a member of a joint Hindu family to contract in his own individual capacity with the family as a matter of partnership and to maintain a separate interest for himself in that concern. For these reasons, they reversed the decision of the Appellate Assistant Commissioner and allowed the appeal. Application was made by the respondent for a reference to the High Court. In that application, it was stated that the following questions of law arose:― (1) Can there be a partnership within the meaning of Section 2 (6B) of the Indian Income-tax Act, 1922, between a Hindu undivided family as such on the one part and one of its undivided members in his individual capacity on the other part? (2) Even if such a partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question in the negative and thus reversing the decision of the Tribunal. Before their Lordships objection was taken to the form of the question as set out above on the ground that in the previous proceedings before the Income-tax authorities the partnership relied upon was between the members of the Hindu family as such on the one hand and Daulat Ram, in his individual capacity, on the other. Their Lordships, however, must accept the question as stated in the case presented for their consideration, whatever its previous form might have been. Their Lordships are, therefore, concerned in this case only with the validity of a partnership between the karta of the family representing it on the one hand and a member of that family in his individual capacity on the other. It is unnecessary to consider in this case the question relating to the validity of a partnership between a Hindu undivided family as such of the one part and one of its undivided members in his individual capacity of the other. With reference to the latter kind of partnership, there seems to be some authority favouring the view that such a partnership cannot exist under the rules of Hindu law, but their Lordships ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development, their Lordships think that it is now firmly established that an individual coparcener, while remaining joint, can possess, enjoy and utilise, in any way he likes, property which was his individual property, not acquired with the aid of or with any detriment to the joint, family property. It follows from this that to be able to utilise this property at his will, he must be accorded the freedom to enter into contractual relations with others, including his family, so long as it is represented in such transactions by a definite personality like its manager. In such a case he retains his share and interests in the property of the family, while he simultaneously enjoys the benefit of his separate property and the fruits of its investment. To be able to do this, it is not necessary for him to separate himself from his family. This must be dependent on other considerations, and the result of a separate act evincing a clear intention to break away from the family. The error of the Income-tax Officer lay in his view that, before such a contractual relationship can validly come into existence, the natural family relationship must be brought to an end. This erroneous view appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes) was formed between the same individual acting, on the one hand, as the karta of the joint Hindu family and, on the other, as a partner in his individual capacity. He came to occupy, in the same transaction, two different capacities: one as representing the interests of the family and the other as representing his private interests. These two capacities might in certain conceivable circumstances be in conflict. The partnership in that case was, therefore, rightly disallowed. In conclusion, it was argued for the respondent that a joint Hindu family being by its nature a frequently changing entity no partnership could be formed with it. This objection, if valid, would be equally operative against a partnership of the family with a stranger, which the authorities prove, and it is practically conceded in this case, can be validly formed. But, apart from this answer, it may be pointed out that though in its nature a joint Hindu family may be fleeting and transitory, it has been regarded as capable of entering, through the agency of its karta, into dealings with others. Without accepting the view of some eminent Hindu Judges that a Hindu joint family is, in its true nature, a cor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
