Madan Mohan vs Commissioner of Income Tax

S.P. Goyal, J.—The assesses was a partner as an individual in the firm, M/s. Bharat Cinema, and in the partnership which took this establishment on lease, he represented the Hindu undivided family as its karta. He received a salary of Rs. 2,975 from the lessee firm for the year ending on March 31, 1973, and entered the same in the return filed for the assessment year 1973-74 showing it as his individual income. However, the Income Tax Officer included the said amount in the Hindu undivided family income as wel] as in his individual income while framing the assessments, The assessee, therefore, moved an application u/s 143(2)(i) of the Income Tax Act, 1961 (for short called "the Act"), for deleting the said amount from his personal assessment. The Income Tax Officer rejected the application observing that if there was any mistake in the assessment of the Hindu undivided family, the assessee could move a petition for its rectification and confirmed the inclusion of the said amount holding it to be his personal income. Having failed before the appellate authority as well as the Tribunal, he moved an application u/s 256(1) of the Act which was also rejected. Thereafter, he filed the present petition u/s 256(2) for a mandamus requiring the Tribunal to refer the following three questions to this court:

" (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the salary of Rs. 2,973 paid by M/s. Bharat Cinema (lessees), Jind, in which the assessee-individual was not a partner was rightly assessed in the hands of the assessee, specially when the family funds had been invested in the said firm and the share income had already been allocated in the hands of the HUF under Sections 182(2) and 67 of the Act ?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in ignoring the relevant provisions of law contained in Sections 67 and 182(2) of the Income Tax Act, 1961, and further erred in coming to the conclusion that the salary was rightly assessed in the hands of the assessee by ignoring relevant pieces of evidence and by taking into consideration irrelevant ones ?

(iii) Whether, on the facts as ascertained by the Tribunal, the salary income of Rs. 2,975 paid by the lessee firm, in which the assesses joined as karta of the family and invested family funds, could be said to have accrued to the assessee (individual) ? "

A perusal of the three questions would show that in fact the point involved is only one and the same and has been repeated thrice in three different forms. No doubt, the question as to whether the amount of Rs. 2,975 received by way of salary was the income of the Hindu undivided family or of the assessee on the facts proved, would be a mixed question of law and fact, but as the answer would be explicit in view of the finding of fact recorded by the various authorities, no purpose would be served by issuing a mandamus.

From the terms of the partnership reproduced in the judgment of the Appellate Assistant Commissioner, annexure P-2, it is evident that the partners were not to contribute any capital for becoming members of the partnership. Instead, it was stipulated that the partnership shall arrange capital on payment of 12 per cent. interest. The total money advanced by the Hindu undivided family was Rs. 6,000 on which it was to receive 12 per cent. interest. From these facts, it is evident that no asset of the Hindu undivided family was utilised for becoming a partner in the lessee firm by the assessee. The contribution towards the capital by the Hindu undivided family was only by way of loan upon which it was to receive 12 per cent. interest. In these circumstances, it cannot be said that the amount paid as the salary of the assessee was nothing but a constituent of the profits falling to the share of the Hindu undivided family. The decisions relied upon, namely, PT. SHEO NATH PRASAD SHARMA Vs. COMMISSIONER OF Income Tax, LUCKNOW, AND OTHERS., V.D. Dhanwatey Vs. The Commissioner of Income Tax, M.P. Nagpur, P.N. Krishna Iyer Vs. Commissioner of Income Tax, Kerala, and Pratap Veer Kakkar v. CIT [1911] 107 ITR 435 are distinguishable on facts and in all of them it was found as a fact that the salary received by the assessee was because of the contribution and utilisation of the funds of the Hindu undivided family. The present case on the contrary would be governed by the rule laid down in the two Supreme Court decisions, that is, Shri Raj Kumar Singh Hukam Chandji Vs. Commissioner of Income Tax, Madhya Pradesh, and Commissioner of Income Tax, Mysore Vs. D.C. Shah, where the remuneration received by the assessee was held to be individual Income because there was no real or sufficient connection between the investment of the joint family funds and the remuneration paid to him. In view of the rule laid down in the two decisions of the Supreme Court, the answer to the question involved would be self-evident and it would be futile to issue a mandamus as prayed for. This petition is accordingly dismissed. No costs.