Bhag Mal Charanji Lal vs Commissioner of Income Tax

S.P. Goyal, J.—The assessee, M/s. Bhag Mal Charanji Lal, is a Hindu undivided family concern. Darshan Kumar, one of the coparceners, entered into a partnership agreement on May 1, 1967, with one Pashupati Nath to carry on a business in sale of petroleum products, under the firm name Darshan Kumar and Co. The amounts of Rs. 905 and Rs. 10,413 received by way of profits from the said concern for the assessment years 1968-69 and 1971-72 were claimed by Darshan Kumar as his personal income, but was included by the assessing authority in the income of the Hindu undivided family holding that Darshan Kumar entered into the agreement not in his individual capacity but as a coparcener representing the Hindu undivided family. Having failed in the first appeal as well as before the Tribunal, he moved an application u/s 256(1) of the Income Tax Act, 1961 (for short called "the Act"), for referring the following questions to this court :

"1. Whether, on the facts and in the circumstances of the case :

(a) Shri Darshan Kumar became a partner in the firm M/s. Darshan Kumar & Co. with the aid of the Hindu undivided family funds only and whether the income received by him had any and only real connection with the investment/realisation of funds of the joint family in M/s. Darshan Kumar & Co. ?

(b) Whether there was any nexus between the starting of the firm M/s. Darshan Kumar and Co., Jaitu, and investment of the appellant family funds in the said firm ?

(c) Whether the income received by Shri Darshan Kumar from M/s. Darshan Kumar & Co., Jaitu, is his individual income or assessable in the hands of the appellant family ?

(d) Whether the Hindu undivided family named M/s. Bhag Mal Charanji Lal, Jaitu, the appellant has suffered any detriment in parting with the finances given to Shri Darshan Kumar, one of the coparceners, and member of the Hindu undivided family for starting of his individual business ?

(e) Whether it is not the duty of the Department to ascertain that the assessment being made by the Department is being made on the person correctly and rightly ?

(f) Whether temporary loans and trade credits to M/s. Darshan Kumar & Co. by the appellant family tantamount to contribution of finance by Darshan Kumar for the family and whether the profit earned is due to these finances ?"

The application was declined by the Tribunal which led to the filing of the present petition u/s 256(2) of the Act ?

The answer to all the questions framed depends on the basic question of fact as to whether Darshan Kumar entered into partnership in his individual capacity or as a coparcener representing the Hindu undivided family. The Tribunal, after taking into consideration the various facts and circumstances, held that he entered into partnership not in his individual capacity, but as a coparcener representing the Hindu undivided family. This is essentially a finding of fact. The questions framed, therefore, do not contain any question of law which may need determination by this court. The petition is accordingly dismissed but without any order as to costs.