1955 (2) TMI 27

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..... of this family, Gandalal and Nandlal, became partners in the business of Atnulakh Amichand Co. which was carried on in the taxable territories. The question that falls to be considered and decided is whether the fact that the two coparceners of a Hindu undivided family carried on business in partnership within the taxable territories renders the Hindu undivided family a resident within the meaning of the Income-tax Act. Turning to the definition of a resident, when it applies to a Hindu undivided family, we find the definition in section 4A(b). A Hindu undivided family, firm or other association of persons is resident in the taxable territories unless the control and management of its affairs is situated wholly without the taxable te .....

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..... he has an obligation to account to the family for profits made by him in the partnership. But it is equally clear that the family has no control whatsoever with regard to the affairs of the partnership. The other partners could refuse to recognise the fact that one of their partners is accountable, for the profits made by him to the family. Therefore, as far as the partnership is concerned, the control and management is in the hands of the individual coparcener who is the partner and not the family. Now, can it be said that the mere fact that the Hindu family has to pay tax in respect of profits which would be attributable to the share of the coparcener renders the business itself the affair of the partnership? Let us look at the different .....

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..... erritories, and the Supreme Court dealt with different pieces of evidence which had been considered by the Income-tax authorities and the High Court, and with regard to the formation of two partnerships by the karta the Supreme Court dismissed that evidence with the remark that the starting of two partnership businesses were mere activities* on the part of the karta which would be no test of residence as far as the Hindu family was concerned. Therefore, the view of the Supreme. Court seems to be that even though a partnership business may be a profit making activity of the Hindu family, it would not be the affair of the Hindu family in the sense in which that expression is used in the Income-tax Act, and Mr. Justice Fazl Ali in his judgment .....

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