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TMI Blog1970 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case is the Hindu undivided family consisting of Shri B. N. Bhaskar, the karta, his wife and sons. The assessment under reference is for the year 1959-60 and the relevant previous year is the financial year ending 31st March, 1959. During the relevant previous year, Shri B. N. Bhaskar was the sole proprietor of a managing agency business run under the name and style of M/s. Bhaskar Brothers. This managing agency business came into existence under the following circumstances : B. N. Bhaskar, the karta of the assessee-Hindu undivided family, was the joint owner along with his father, A. N. Bhaskar, and his two brothers, T. N. Bhaskar and R. N. Bhaskar, of two concerns, namely, Ishwar Pottery Works, Delhi, and Delhi Glass Works, Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being assessed in the status of an individual during the period prior to the assessment year 1959-60 not only in respect of the remuneration which the limited company paid to M/s. Bhaskar Brothers but also in respect of the dividend income on the shares held by him in the company. In his assessment for the year 1959-60, B. N. Bhaskar claimed that the managing agency remuneration was assessable in his hands as an individual and that the dividend income and other income were assessable in the hands of the Hindu undivided family of himself, his wife and sons. The Income-tax Officer, however, assessed the entire income including the managing agency remuneration in the hands of the Hindu undivided family. On appeal, the Appellate Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brothers as managing agents of the company and the investments made by the Hindu undivided family of A. N. Bhaskar and his sons in the company, the said appointment was part of the scheme under which the limited company purchased the two concerns of the Hindu undivided family ; and (iv) that the partners of the firm of Messrs. Bhaskar Brothers, represented their respective families in the partnership business. Before considering these contentions, it is desirable to state the legal position. There is divergence of opinion on this subject between the several High Courts and these divergent views seek support from the several decisions of the Supreme Court. But the position has now been clarified by the Supreme Court in a recent case, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear as income of the Hindu undivided family of B. N. Bhaskar, his wife and sons. It is, no doubt, true that the firm of Messrs. Bhaskar Brothers came into existence at a time when the two concerns, Ishwar Pottery Works and Delhi Glass Works belonged to the Hindu undivided family of A. N. Bhaskar and his sons. But this fact by itself does not lead to the conclusion that the firm was also the property of the Hindu undivided family of A. N. Bhaskar and his sons. Prima facie, it was independent of the two concerns, Ishwar Pottery Works and Delhi Glass Works, because one of the partners of the firm, namely, Shri N. L. Bhardwaj, was a stranger. The partnership deed of this firm is not before us. The assessments of the firm during the period prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment of the Hindu undivided family amounted only to Rs. 1,56,975. No connection has, thus, been established between the investment made by the Hindu undivided family in the company and the appointment of Messrs. Bhaskar Brothers as its managing agents. On the other hand, the appointment of Messrs. Bhaskar Brothers as the managing agents of the limited company might very well have been due to the fact that the managing agency firm consisted of persons who had considerable experience in running the business. There is hardly any material to hold that the appointment of Messrs. Bhaskar Brothers as managing agents of the limited company was part of the scheme under which the limited company purchased the two running concerns from the Hindu und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of some special qualifications possessed by the partners of the firm. But the question whether the remuneration received either by the director, the managing director or the managing partner on the one hand, and the managing agency firm on the other hand, is their individual income or the income of their Hindu undivided families, does not primarily depend upon the existence or absence of any special qualifications. It depends upon the tests laid down by the Supreme Court in the case of Raj Kumar Singh Hukam Chandji. In our view, these tests are applicable as much to cases of managing agency firms as to cases of directors, managing directors and managing partners. Applying the above tests to the present case, we have no hesitation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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