Vs. Jagat Narain Shrivastava  INSC 101 (24 February 1993)
appeal is preferred against the judgment of the Madras High Court answering the
question referred to it, at the instance of the Revenue, against the Revenue.
The question referred is :
on the facts and in the circumstances of the case, the Tribunal was right in
law in holding that the assessee's share in the partnership firm of M/s Erode
Service constituted a separate and individual property and not the property of
the joint family consisting of himself and his five sons?"
Mudaliar had five sons including the assessee. There was a complete partition
among Angappa Mudaliar and his five sons in the year 1943. The said partition
was also accepted and recorded by the Income Tax Department under Section 25-A
of the Indian Income Tax Act, 1922. Angappa Mudaliar died on January 25, 1962 leaving behind him certain assets.
The question is whether the share obtained by the assessee in his father's
assets in his separate property? The High Court has answered it saying that it
is governed by Section 8 of Hindu Succession Act and therefore the said share
is his separate property. This question has since been concluded by the
decision of this Court in CWT v. Chander Sen1 which has also been followed in
CIT v. P.L Karuppan Chettiar2. It is held that in such circumstances the share
obtained by the son is governed by Section 8 of Hindu Succession Act and
therefore his separate property. The appeal is accordingly dismissed. No costs.
(1986) 3 SCC 567: 1986 SCC (Tax) 641: (1986) 161 ITR 370 2 1993 Supp (1) SCC
580: (1992) 197 ITR 646 113 RAM BILAS v. JAGAT NARAIN SHRIVASTAVA ORDER 1.These
appeals by special leave are against the judgment of the High Court dated March
19, 1974 in Second Appeal No. 370 of 1971 and the order dated March 18, 1976,
rejecting the review application against the main order. The High Court allowed
the defendant's second appeal by the main order, after the defendant had failed
in the trial court as well as in the first appellate court.
suit property is a house in Faizabad. The defendant-respondent, now substituted
by his LRs, was a tenant in the suit house when the house was purchased by the
appellants on February 8, 1968 for a sum of Rs 3750, the sale deed being
executed by Smt Chinta Devi, wife of Ram Shanker Lal, and their children, Lava Shanker
and Smt Shail Bala. The house belonged originally to Ramjas Lai, father of Ram Shanker
Lai who died in 1944. The whereabouts of Ram Shanker Lai were unknown and he
was not heard by even his wife and children for a long time prior to execution
of the sale deed in appellant's favour on February 8, 1968. The exact date from which Ram Shanker
Lai was not heard of or seen by any of his close relations is not clear.
However, in the sale deed itself, it was mentioned by his wife and children
that the said Ram Shanker Lai had not been heard of or seen by any one of them
for more than seven years prior to the date of execution of that sale deed. It
may also be mentioned that the statement of the defendant, Jagat Narain,
forming part of the record, made before the Nazul Officer, Faizabad on July 8,
1958 contains his admission that his maternal uncle Ramjas Lai had died 15
years earlier and the whereabouts of his son, Ram Shanker Lai were not known
from the lifetime of his father, and that Ram Shanker Lai had most probably
died. This would indicate that even according to the defendant's statement
recorded in the year 1958, Ram Shanker Lai was presumed to have been dead at
appellant after purchasing the suit house in the above manner instituted a suit
for ejectment of the defendant-respondent also claiming therein arrears of rent
in view of the fact that the defendant had admittedly not paid any rent to him.
The defendant contested the suit on a vague plea. The defendant contended that
a loan of Rs 1500 was taken by Ramjas Lai from him which he did not repay and
after the death of Ramjas Lai, his son Ram Shanker Lai had agreed that in lieu
of the loan the defendant could obtain a sale deed. The defendant further
pleaded that to honour that statement, the defendant was also 114 given
possession. It is sufficient to say that the pleading of the defendant did not
amount to setting up acquisition of title by him in any manner prescribed by
trial court decreed the suit and the defendant's first appeal was dismissed.
Thereafter, the second appeal by the defendant has been allowed by the High
Court giving rise to the present appeals. The High Court has noticed the fact
that even though the precise date of death of Ram Shanker Lal was not proved,
yet the fact that he was not seen or heard of since 1944 was conceded by the
after noticing this fact, the High Court proceeded to say that "Ram Shanker
Lal can be presumed to be dead.
can be no presumption that Ram Shanker Lal did on February 7, 1968, with the
result that his heirs and vendors could transfer valid title to the
petitioner". It is difficult to appreciate much less accept this
conclusion of the High Court which has been treated as an essential condition
to uphold the validity of the sate made by the wife and children of Ram Shanker
Lal in favour of the appellant. All that was necessary to be seen was whether
Ram Shanker Lal was alive on the date of execution of the sale deed in 1968 so
that in the absence of his joining in execution of the sale deed, the sale deed
could be treated as ineffective to transfer his share in the ancestral
property. From the conclusion reached by the High Court itself, Ram Shanker Lal
had to be presumed to have died much prior to the execution of the sale deed in
1968 since it was conceded that he was neither seen nor heard of since 1944
even by his wife or his children. This being so, the only persons who were
required to execute the sale deed for effecting a valid transfer of the
property in favour of the appellant on February 8, 1968 when the sale deed was
executed in the appellant's favour were the wife, son and daughter of Ram Shanker
Lal, who admittedly have executed the sale deed in appellant's favour under
which the appellant claims title. There was thus no ground available in the
second appeal, for the High Court to set aside the decree passed in the
Civil Appeal No. 1263 of 1976 is allowed and the impugned judgment dated March
19, 1974 by which Second Appeal No. 370 of 1971 was allowed is set aside
resulting in restoration of the decree passed in plaintiff's favour by the trial
court as affirmed in first appeal. In view of this result, the order of the
High Court dismissing the review petition is ineffective and the Civil Appeal
No. 1264 of 1976 is, therefore, allowed on this basis. The appellant will get
the cost throughout from the respondent.
INDRAMANI BAI v. ADDL. C.I.T.
are the appellants. They areaggrieved by the judgment of the Andhra Pradesh
High Court answering the question referred to it under Section 256(1) of the
Income Tax Act, at the instance of the Revenue, against them. The two questions
referred read as follows:
Whether on the facts and circumstances of the case the profits of Rs 41,666
derived by the assessee was an adventure in the nature of trade;
the answer to the above question is in affirmative, whether the assessment
could be made in the status of an association of persons."
are the wives of two brothers, who are partners in a firm. In December 1963,
the assessees purchased a piece of land measuring 8479 sq. yards in the Banjara
Hills area of Hyderabad, for a consideration of Rs 10,620.
They say, they raised the purchase-money by selling their silver to the
partnership firm, of which their respective husbands are partners. The firm
deals in bullion. Shortly after purchasing the land, they carved it into four
plots and sold them individually. Two agreements of sale were entered into, one
in May and the other in July 1964 and sale deeds executed in pursuance thereof
on October 9, 1964 and November 13, 1964. The total consideration received under the sale deeds is Rs
52,285. The Income Tax Officer brought the difference amount to tax treating
the transaction as an adventure in the nature of trade. The assessees
questioned the same by way of an appeal before the Appellate Assistant
Commissioner. It was dismissed. The matter was then carried in further appeal
to the Tribunal.
Tribunal allowed the appeal holding that the intention of the assessees while
purchasing the said land was to make an investment and that they had no
intention of re-selling the same. It observed that having regard to the
background of the assessees, the transaction cannot be held to be an adventure
in the nature of trade. On reference the High Court came to a contrary
conclusion. According to the High Court, the fact that soon after the purchase
of the land, the assessees carved it into plots and sold them within a few
months, coupled with the other facts and circumstances of the case, establishes
that the intention of the assessees, even when they purchased the land, was to
resell the same and not to make an investment. It is the said conclusion which
is questioned before us.
the facts found, we cannot say that the High Court was in error in coming to
the conclusion it did. On the other hand, the Tribunal seems to have made
certain assumptions while coming to the conclusion in favour of the assessees,
which were not really warranted. The Tribunal refers to the 116 'background of
the ladies' as one of the circumstances inducing it to come to the conclusion
in favour of the assessees but it has not taken care to elucidate what that
background was. The fact that soon after the purchase, the assessees carved out
the land into plots and sold them within a few months, coupled with other
circumstances of the case, is consistent more with the theory of adventure in
the nature of trade than with the other theory accepted by the Tribunal.
are, therefore, unable to see any ground for interference in this appeal. It is
will be no order as to costs.