1. Although the reference has been very elaborately argued it really raises a very short and simple question. It is merely a question of fact, and the question turns upon whether there were materials before the Tribunal upon which the finding of fact was arrived at, and the fact in question is whether the income in the share of the commission agency of certain mills was the income of a Hindu joint family or the income of the coparceners constituting the family.
2. Now, the assessee is a Hindu undivided family and this Hindu undivided family was receiving a share in the managing agency commission of various companies which were managed by a partnership firm, and in this partnership firm, the joint Hindu family had a share, and the joint Hindu family was represented in the partnership by Charandas Haridas as the karta. What was contended before the department was that by a memorandum executed by the coparceners a partial partition of the assets of the joint Hindu family was brought about and the asset that was partitioned was the income received from the managing agency commission and after this partial partition the income was no longer the property of the joint Hindu family but became divided in the hands of the coparceners and was the specific income of each coparcener.
3. Now, in order to decide this question, we must first look at and consider the document which was relied upon by the assessee. This document is described as the partial partition of the Hindu undivided family of Charandas of Ahmedabad. This document recites that the joint Hindu family received a commission of Rs. 0-1-11 5/12 from the Vijay Mills Co. Ltd. and out of this commission Sheth Charandas Haridas had given a certain share to his daughter Pratima. The family also received Re. 0-2-1/2 commission from the Gopal Mills Co. Ltd. and Charandas Haridas had given one pie commission out of this to his daughter. After deducting these Re. 0-1-10 5/12 and Re. 0-1-11 1/2 commission remained, and the document recites that these commissions and other commissions received from various other mills have been partitioned orally by them on Samvat 2002 Magsar Vadi 12 dated 31st December, 1945. Then the document states the effect of this partition and the signatories state that 'We have decided that whatever commission fell due till 31st December, 1945, and which is received after 31st December, 1945, should be kept joint and in respect of the commission which accrues from 1st January, 1946, and received after that date each of us becomes absolute owner of his one-fifth share and therefore from that date, i.e., from 1st January, 1946, these commissions cease to be the joint property of our family.' Then the document ends by stating 'Whatever commission is received by Charandas Haridas is to be given our to all of us according to our share. Also in the case of the commission standing in the name of Sheth Haridas Acharatlal in other remaining limited companies and in which the share of our family is ascertained in the name of Sheth Charandas Haridas he has to pay to each of us according to the share of each.'
4. Now, on this document Mr. Palkhivala contends that there was partial partition of an asset belonging to the joint Hindu family and after this partial partition the income resulting from this asset was no longer the income of individual coparceners comprising the family. It is well established in Hindu law that a joint Hindu family without severing its status may by agreement partition some of the assets belonging to that family. Qua those assets the coparceners would become tenants-in-common. The status of the joint Hindu family would continue, and qua the property not partitioned the coparceners would be joint tenants and not tenants-in-common. Therefore, Mr. Palkhivala is right when he contends that there is nothing in Hindu law to prevent coparceners from partitioning one or more assets belonging to the family without necessarily bringing about a severance of status. But the question is whether such a partial partition is brought about by this document.
5. It is clear that the partial partition contemplated by Hindu law is a partition which brings about a change in the nature of ownership and not a partition which brings about a change in the mode of enjoyment. If the nature of ownership is not changed, the mere fact that the coparceners decided to enjoy the produce from a particular asset in a particular way will not bring about a partition. Take this very case. The asset which belongs to the joint Hindu family is not the commission, it is the share in the partnership which share results in this commission. If the members of the joint family agree to change the nature of ownership of that share then undoubtedly there would be a partial partition qua that share. But, on the other hand, the members of the joint family may agree without interfering with the nature of the ownership to provide for a particular mode of enjoyment of the income arising from that share, and if the coparceners were to say that when the income comes in from this particular asset we will enjoy that income in a particular manner or share it in a particular manner, there is no partial partition, because the asset continues to remain, as it was before, in the ownership of the joint Hindu family.
6. Now, in this case the signatories to the document emphasise the fact that what they are dividing, what they are dealing with, is the commission, not the share which produces this commission, and in the last paragraph of the agreement to which attention has been drawn it is expressly stated that Sheth Charandas Haridas has to pay to each of the coparceners according to his share as and when the commission is received. Therefore we read this document not as recording a partition of an asset belonging to the joint Hindu family but a document providing for the distribution of the income after it has accrued to the family and has been received by the joint family. It should also be borne in mind, and it is not disputed, that Charandas Haridas was a partner in the managing agency firms on behalf of the joint Hindu family. He represented the joint Hindu family. He received the share in the managing agency commission not in his individual right but as representing the family. The partnership agreement also provided that although a partner in the firm fan have sub-partners in respect of his share in the firm, the sub-partners will not be recognised as partners in that firm and the person in whose name the share stands in the firm will alone be recognised as the owner of and be liable in respect of the said share in the firm.
7. Now, it is urged by Mr. Palkhivala that it is not possible in Hindu law for coparceners to divide the income arising from an asset or the produce of an asset without necessarily dividing the asset. Mr. Palkhivala says that it is a well established rule of Hindu law that no member of a joint Hindu family can predicate while the family remains joint of army particular asset of the family that he has a specific share in that asset; and according to Mr. Palkhivala the income being also an asset of the joint Hindu family once the shares have been made specific and once a coparceners can predicate that he has a specific share in that income, there is a partial partition not only of the income but also of the asset which produces that income. This contention was specifically urged before the Privy Council and the Privy Council has considered this contention in two cases and emphatically negatived it.
8. The first decision is in Sonatun Bysack v. Sreemutty Juggutsoondree Dossee. In that case a Hindu by his will gave his property to his four sons and provided for a particular mode of devolution depending upon whether the sons remained joint or separate. The sons divided the income of the property and the question arose whether by reason of this division there was a division of the property itself. At page 86 their Lordships say :
'There has been no division at all of this family, unless the division of the income during the few years which followed upon the death of the testator up to a short period after the death of Hurrymohun Bysack constituted a division of the family, and their Lordships are very clearly of opinion, that the mere division of income, for the convenience probably of the different members of the family, did not amount to the division of the family.'
9. Therefore this is a clear expression of opinion that you may have a division of the income of the family for convenience or otherwise without necessarily resulting in a division of the property which produces the income. Undoubtedly, Mr. Palkhivala is right that you may have a case where the parties by dividing the income intend to divide the asset which produces that income. But in order to arrive at that conclusion there must be some other circumstances present than the mere division of the income. The contention of Mr. Palkhivala which is unacceptable is that the mere division of income must inevitably result in a partition of the property which produces the income.
10. Mr. Palkhivala has then relied on a later judgment of the Privy Council reported in Appovier v. Rama Subba Aiyan. In that case their Lordships of the Privy Council were considering a partition deed which partitioned various villages belonging to the family. With regard to certain villages only the income was divided, and the Privy Council considering this part of the partition deed expressed the opinion at page 92 :
'Nothing can express more definitely a conversion of the tenancy, and with that conversion a change of the status of the family quoad this property. The produce is no longer to be brought to the common chest, as representing the income of an undivided property, but the proceeds are to be enjoyed in six distinct equal shares by the members of the family, who are thenceforth to become entitled to those definite shares.'
11. Mr. Palkhivala wants us to apply the same test here and he says that once the income does not go to the common chest there is a conversion of the tenancy qua the property which produces the income, and the property from being joint tenancy becomes tenancy-in-common. But in basing this argument Mr. Palkhivala overlooks what the nature of the document before the Privy Council was, and the Privy Council points out at page 91 that there may be a two-fold application of the word 'division'. There may be a division of right, and there may be division of property; and thus, after the execution of this instrument, there was a division of right in the whole property, although, in some partitions, that division of right was not intended to be followed up by an actual partition by metes and bounds, that being postponed till some future time when it would be convenient to make that partition. Therefore, the view that the Privy Council took of that document was that there was a partition of all the property with regard to the right to that property but with regard to the actual physical partition as far as some villages were concerned, that was postponed and while that was postponed the income was to be divided between the coparceners. On these facts the Privy Council came to the conclusion that even with regard to those villages where merely the income was divided there was a partition. Now, surely that is not the case here. As we have already pointed out there is nothing in the document which suggests that the parties intended to partition the right to property. All that they intended to partition perhaps the better expression is to divide and distribute was the commission, the income arising out of the property, and as the earlier Privy Council case points out the mere change in the mode of convenience or otherwise does not result in the partition of the asset which yields the income or the produce.
12. Going back to the question which we have to answer on this reference, we have to be satisfied that there were materials which would justify the Tribunal in coming to the conclusion that it did. In the first place, there is this document itself which has been construed by the Tribunal, and in our opinion rightly construed it. The Tribunal also states in the statement of the case that the Tribunal doubt the genuineness of the memorandum. Perhaps Mr. Palkhivala is right that is not open to the Tribunal to give a finding which it did not give in the order itself. Although in order they have called this transaction a farce, it seems that that expression is used not as indicating that the document was not a genuine document but as indicating that the document did not bring about the necessary result which was intended by the formers of that document. The Tribunal has also relied on the fact that although this memorandum was executed on the 11th of September, 1946, the partition having taken place on the 1st of January, 1946, it was only in April, 1948, that separate returns were filed in the name of the coparceners. Now Mr. Palkhivala says that inasmuch as no returns were made after 1946 this factor is not of much importance. But whether it is of importance or not, it is a factor which the Tribunal has taken into consideration in adjudicating upon the question of the partition of the joint family assets, and this factor has weighed with the Tribunal in the view that it took that this particular asset continued to be the asset of the joint Hindu family. In our opinion there were materials before the Tribunal to justify the conclusion it came to.
13. The result is that we must answer the question submitted to us in the affirmative. The assessee to pay the costs.
14. Reference answered in the affirmative.