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TMI Blog1973 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 the income of the firm with that of the family. He, therefore, deleted the firm's income of Rs. 5,805 in the assessment of the family. There was a further appeal to the Tribunal by the revenue. The Tribunal was not inclined to accept the view taken by the Appellate Assistant Commissioner that the firm, E.A.E.T.Sundararaj & Co., was a genuine firm, but took the view, on the facts set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 family and the wife of an undivided member of the Hindu undivided family; (ii) The capital provided by the partners was lying in deposit with others and was bringing in some interest to the ladies. (iii) The business of the firm was also in the same line as that of the assessee ; and there was no specific reason for the wives of the members of the family starting a rival business. (iv) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 supposed to have borrowed capital from the Hindu undivided family at the time of the constitution of the firm and brought in their capital only at a later stage. We are of the view that this circumstance that the partners did not bring their capital in the first instance is not altogether an irrelevant consideration in finding out the ownership of the business. It is not in dispute that the entire capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 should only be genuine. The question whether a particular firm is benami or genuine has to be determined mainly on the facts and circumstances of each particular case and on the basis of the evidence available on record in that case. It is on the cumulative effect of all the materials that are available, the Tribunal has to decide the question of benami and, if there are some materials which can be accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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