TMI Blog1960 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... h, 1940, at ₹ 195 per mensem. Under the terms of his appointment, he was required to furnish security and in that connection he deposited security to the value of ₹ 60,000 in the form of Government securities, indemnifying the Government for any loss which might occur during the tenure of his office as treasurer. Further, he also furnished a security bond. The appointment having taken place in the year 1940, the remuneration received under the appointment was assessed for the first time in the income of the assessee Hindu undivided family under the head salary . In the next four assessments, the same remuneration was charged to tax as income from business, profession or vocation under section 10 of the Act and in the first instance deductions of tax under section 10 were not allowed. This error was later on corrected by an order under section 35 of the Income-tax Act. In the year 1946-47 also, this income was assessed under section 10 of the Income-tax Act and, during those various years, this income was also included in the income of the Hindu undivided family for purposes of assessment to excess profits tax. In the next two years 1947-48 and 1948-49, this remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the President of the Tribunal who agreed with the Accountant Member and, therefore, allowed the claim of the assessee. Thereupon, the Commissioner of Income-tax filed an application under section 66(1) of the Income-tax Act and the Income-tax Appellate Tribunal has now referred the question mentioned above to us for opinion on the basis of the application. When the statement of the case was prepared, the assessee moved the Income-tax Appellate Tribunal to include in the statement of the case one more fact, viz., that Seth Lal Chand was appointed treasurer for two other treasuries also situated at Sambhal and Panchabhadra. The Tribunal rejected this application for including this statement of fact in the statement of the case on the ground that it was unnecessary. The assessee has moved an application in this court under section 66(4) of the Income-tax Act praying that we should ask for a further statement of the case on this question of fact. That application was directed to be put up for orders at the time of the hearing of the reference. We enquired from the learned counsel for the Department whether he was opposing that application. Learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are superior officers of the treasurer, Seth Lal Chand, and (5) duty is cast on the treasurer to keep true and faithful accounts of the property entrusted and of his dealings under written orders of his superior officer therewith in the form and manner that may from time to time be prescribed under the authority of Government and also to prepare and submit such returns and accounts as he may from time to time be called upon to prepare and submit. On the other side, the facts which appear to indicate the remuneration which was paid on appointment of Seth Lal Chand as treasurer was income from business are that (1) the treasurer had and was to have the power to use his discretion in the appointment, promotion, suspension, dismissal and retirement of his subordinates and was to have the power to demand security deposit with or without interest to keep with himself till the expiry or termination of his or their services, though all such orders under this clause were subject to the approval of the district officer who was always to be empowered to direct the treasurer to dismiss, suspend or punish any particular member of the staff and the treasurer had always to comply with such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the assessee was receiving a salary. In these circumstances, it is not possible for us to hold that there was no material before the Tribunal for arriving at the finding which the Tribunal did. It may be that on that material two opinions might have been possible. As we have stated earlier, the question that arose was essentially a question of fact to be decided on the facts and circumstances found. While we find that there was material for arriving at the view which the Tribunal did, it is not possible for us to set aside the finding recorded by the Tribunal. We may, in this connection, refer to a decision of this court in Commissioner of Income-tax v. I.D. Varshani [1953] 24 ITR 328 where, in similar circumstances, it was held by this court that a finding having been recorded that certain income was salary was a finding of fact on the material and, consequently, it could not be set aside by this court. We may, however, add that, apart from the ground mentioned above, there is another reason why we must hold that in this case the view taken by the Tribunal is correct. We have mentioned earlier that, in the statement of the case, the Tribunal has stated that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was income being received by the assessee family and not income received by Seth Lal Chand in his individual capacity. Some confusion, however, appears to have occurred in the statement of the case wherein the Tribunal proceeded to mention that Seth Lal Chand was appointed as Government Treasurer. No doubt, the letter of appointment mentions that Seth Lal Chand is being appointed as Government Treasurer. But in these proceedings for assessing the Hindu undivided family, the question could only arise on the basis that the appointment as Treasurer was really that of the Hindu undivided family. It was for this reason that the President of the Tribunal in his appellate order clearly stated that the family was appointed Government Treasurer, Ajmer-Merwara. At this stage when the case has already proceeded up to its decision by the Income-tax Appellate Tribunal in proceedings for assessment of the assessee on the basis that the family was appointed as Government Treasurer, though in the name of Seth Lal Chand, it is not open to this court to go behind this fact and the question has to be answered on the basis that it is an admitted fact. The fact that the appointment as treasur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 449 . The Supreme Court laid down the principle in the following words : When a partnership firm comes into existence, it can be predicated of it that it carries on a business, because partnership according to section 4 of the Indian Partnership Act is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. After laying down this principle their Lordships of the Supreme Court referred to the case of Inderchand Hari Ram ( supra) cited above by us. In the present case also it is, therefore, a relevant consideration to see whether when a contract for accepting appointment as treasurer is entered into by the karta on behalf of a Hindu undivided family, it can be held that the family accepted a contract of service and was not entering into a contract of business to work as an independent contractor. As we have said earlier, a Hindu undivided family, which may consist of numerous persons cannot as a whole become a servant of the Government nor can it be held that every single member of the family, whether that member be a female or male or whether the member be an adult or a minor would become ..... X X X X Extracts X X X X X X X X Extracts X X X X
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