1. The following question of law has been referred for our opinion by the Income-tax Appellate Tribunal, Allahabad :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the share income of Sri Gajanand Sutwala from the partnership firm of M/s. Ganesh Prasad Dalal for the assessment years 1962-63 and 1963-64 was assessable as the income of the assessee-Hindu undivided family ?'
2. The assessee, Sri Gajanand Sutwala, is a Hindu undivided family. Up to the year 1961-62 the assessment used to be made on the assessee in the status of an individual inasmuch as he was the sole surviving coparcener. On April 23, 1961, Sri Gajanand Sutwala, however, adopted Sri Hemant Kumar as his son and his status thereafter for purposes of assessment has been accepted to be that of a Hindu undivided family. Sri Gajanand Sutwala was a partner in a firm known as M/s. Ganesh Prasad Dalai as a representative of the Hindu undivided family. The firm, Ganesh Prasad Dalai, was on 19th October, 1960, re-constituted and a deed of partnership was executed on the date. Under the said deed, the various Hindu undivided families which were partners before the said date, ceased to be partners and one representative of each family was taken as a partner. In the case of the assessee, Sri Gajanand Sutwala continued to be a partner in the reconstituted firm. For the assessment years 1962-63 and 1963-64, the assessee did not show in his return the share income from the firm, Ganesh Prasad Dalai, on the ground that the said income belonged to Sri Gajanand Sutwala exclusively. The plea of the assessee in this behalf was repelled by the Income-tax Officer and an assessment was made treating the share income of the said firm as belonging to the Hindu undivided family. The order of the Income-tax Officer in this behalf was upheld by the Appellate Assistant Commissioner as also by the Income-tax Appellate Tribunal. The Tribunal in its order dismissing the appeal filed by the assessee held :
'From the facts stated above, it is evident that in the case before us the share in the name of Sri Gajanand Sutwala in the partnership business styled Ganesh Prasad Dalai was a joint family ancestral property. ..... There is admittedly no family arrangement or partition amongst the members of the family justifying the enjoyment of the share of profit from the partnership business by the karta exclusively. ..... Since the facts inthis case show that this change in character was claimed neither on the basis of family partition nor could it be justified as the measure in the interest of the family we have no hesitation in holding that whatever may be the language used in the deed of partnership, the same would not change the beneficial ownership of the Hindu undivided family..... Having regardto all these facts we hold that the share of profit or loss of the partnership business of Ganesh Prasad Dalai in the name of Sri Gajanand Sutwala continues to belong to the assessee family.'
3. From a perusal of the deed of partnership dated October 19, 1960) it would appear that the capital of the Hindu undivided family remained in the firm, Ganesh Prasad Dalai, but the firm agreed to pay six per cent. interest to the Hindu undivided family on those funds. It has not been suggested that 6 per cent. interest on unsecured advance was at all appropriate or adequate. Sri Gajanand Sutwala did not contribute any capital of his own, nor did he contribute anything else by virtue of his being a working partner or otherwise. The funds of the Hindu undivided family with the firm thus constituted the capital for Sri Gajanand Sutwala Ho continue as a partner of the reconstituted firm by the deed dated October 19, 1960. The income which Sri Sutwala received was thus directly related to the utilization of the family assets. In fact it accrued with the aid of the said assets, and the family suffered detriment in the process of realization of such income. Under these circumstances the share income would obviously belong to the joint Hindu family. See Raj Kumar Singh Hukam Chandji v. Commissioner of Income-tax.
4. Accordingly, our answer to the question referred to us is in the affirmative, in favour of the department and against the assessee. The assessee will pay Rs. 200 as costs. The fee of the counsel is assessed at the same figure.
Question answered in the affirmative.