9911796707
TMI Blog1962 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... K. G. Ramakrishnier and Co., the father representing the family in that firm. In that firm, the other partner was K. G. Sitarama Iyer, who represented an other Hindu undivided family. In this reference, we are concerned with the first-mentioned family. The Hindu undivided family of K. G Ramakrishnier had income from property besides the half share of the income from the firm. Up to and including the assessment year 1957-58, assessments were made on the Hindu undivided family. On 5th February, 1958, the Income-tax Officer issued a notice calling upon this family to pay advance tax in respect of the assessment year 1958-59 on the basis of the last completed assessment for 1957-58. The assessee family replied stating that there was a partial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the family and that on the closing date of the previous accounting year, the capital had been divided into three shares and necessary entries had been made in the books of the family. In the accounts of the following year commencing on the 13th April, 1957, separate folios had been opened for each of the members crediting the capital in his name and indicating further the subsequent dealings by each of the members individually. While the Appellate Assistant Commissioner accepted the fact that the books of the family contained separate ledger folios and entries evidencing the division of the capital, he thought that there were no corresponding changes in the constitution of the firm, K. G. Ramamkrishnier and Co., in which the father K. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness. In such cases, the income cannot be taxed in the hands of the Hindu undivided family but in the hands of the partnership only. But in a case where the Hindu undivided family itself had an interest in the partnership and the entries regarding partition of business assets in the Hindu undivided family books did not find a corresponding place in the books of the firm, it cannot be said that in lieu of the Hindu undivided family assets have become partners of the firm (sic)". Though the above observations are not very intelligible, later the Tribunal held, "If the Hindu undivided family has actually divided its business assets on 12th April, 1947, and the income does not belong to the Hindu undivided family but to the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns became divided. As the immediate division by metes and bounds of the immovable and movable properties of the family not being possible, they effected a division only of the assets which the family held in Ramakrishnier and Co. In a partnership agreement which they entered into on the 13th April, 1957, it was stipulated that each of the members should invest his one-third share of the capital and that the profits derived from K. G. Ramakrishnier and Co. should be divided equally among themselves. It may be mentioned that long subsequently, the firm of K. G. Ramakrishnier and Co. was itself reconstituted, all these three members becoming partners in that business in their individual right as also the members of the other Hindu undivided fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee divided members of the joint Hindu family, though the remaining immovable and movable properties had not been divided by metes and bounds. The view taken by the Income-tax Officer and the Appellate Assistant Commissioner that this division by entries in the account books of the family should be discredited solely for the reason that there were no corresponding entries in the books of account of the firm of K. G. Ramakrishnier and Co. is clearly erroneous. It is not the case that on and after the partition in the family of K. G. Ramakrishnier and Co. each and every one of the members therein become automatically members of any firm in which the family was a partner through its karta. The two sons of K. G. Ramakrishnier do not as a consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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