1. This is a rule obtained by the petitioners against the Commissioner of Income-tax to show cause why the case should not be ordered to be stated under Section 66 (2), Income-tax Act.
2. The assessee is a Hindu undivided family -and Kidar Nath is its 'Karta'. This family has acquired a substantial interest in the Ambala Cantonment Electric Supply Company Ltd., shares having been bought with the funds of the family, and it is not disputed that the dividend received belongs to the undivided family. Kidar Nath is the Managing Agent of the Company and under an agreement between Kidar Nath and the Company lie received a remuneration of Rs. 1,420/- on 16-12-1946. This sum has been held by the Income-tax Appellate Tribunal to be the income of the undivided family and this undivided Hindu family has come to this Court for getting a reference made under Section 66 (2) as the Income-tax Appellate Tribunal has refused to make this reference.
3. The question, whether in the circumstances stated the amount received by Kidar Nath is or is not commission belonging to the undivided family) is, in my opinion, a question of law which the Income-tax Appellate Tribunal should have referred to this Court. Reference in this connection may be made to a judgment of the Patna High Court in -- 'Commissioner of Income-tax, Bihar and Orissa v. Darsanram', AIR 1946 Pat 50 (A), where it was held that sums paid to directors as directors' fee are their personal earnings and not the income of the undivided Hindu family and that the undivided family property had not been spent in earning the remuneration of the directors, the dividends that were earned on the shares being the income of the joint Hindu family.
4. I would, therefore, direct the Income-taxAppellate Tribunal to state the case on thefollowing question which arises:
'Whether in the circumstances and on thefacts of this case the sum of Rs. 1,420/-received by Kidar Nath as Managing Agent'sremuneration from the Ambala CantonmentEletric Supply Company Ltd., could be saidto be a part of the income of the Hinduundivided family of which he is the 'karta'?'
5. The other question on which the petitioner seeks reference is a sum of Rs. 800/-which is paid to Kishan Chand by the Hindu undivided family as salary. Kishan Chand is a member of this family and works at their shop, but after considering the various facts which are on the record the Income-tax Appellate Tribunal came to the conclusion that Rs. 800/- was not paid to Kishan Chand as an employee. This is a question of fact and no question of law arises from this in spite of the decision in -- 'Commissioner of Income-tax, Bihar and Orissa v. Jainarain Jagannath', AIR 1946 Pat 68 (B), which has been referred to by counsel for the petitioners but which has no application to the facts of this case.
6. I would therefore make an order for reference in regard to the question which I have indicated above and make the rule absolute to that exent but dismiss the petition in regard to the second prayer and discharge the rule in regard to that. In these circumstances there will be no order as to costs.
7. I agree.