Dipak Kumar Sen, J.
1. The facts found and/or admitted in this reference at the instance of the assessee, Messrs. Y. L. Agarwalla & others, as appearing from the statement of the case and the annexures thereto may be shortly stated as follows :
One Yudhisthir Lal Agarwalla was the karta of a Hindu undivided family known as M/s. Y. L. Agarwalla & Co. Yudhisthir Lal during his lifetime used to carry on business in his capacity as the karta of the said undivided family in partnership in the name and style of M/s. Grand Smithy Works along with S. C. Lall, R. Garodia and T. R. Budhia. The share of Yudhisthir Lal in the partnership was 36 per cent. of the profits and losses.
2. Clause 13 of the deed dated the 20th September, 1961, under which the said partnership of M/s. Grand Smithy Works used to be carried on provided as follows:
'That the death or retirement of any of the partners shall not have the effect of dissolving this co-partnership between surviving partners ; in such an eventuality the co-partnership business may be carried on between the surviving partners and the heir/heirs, legal representative/representatives, assign/assigns, etc., of the deceased and/or retired partner or if mutually agreed upon between the surviving partners and heirs, etc., of the deceased and/or the retiring partner with outsiders also.'
3. Yudhisthir Lal died on the 18th December, 1967, and the partnership firm closed its accounts on the same date, i.e., 18th December, 1967. A new deed of partnership was executed on the 11th January, 1968, with retrospective effect from the 19th December, 1967. Under this new deed, three minor sons of Yudhisthir Lal were admitted to the benefits of the partnership with 14% share each in the profits of the firm. Clause 6 of the new deed provided as follows :
'That the capital of the partnership shall be the amounts as will be found to the credit of the parties hereto of the first, second, third parts and the said Yudhisthir Lal Agarwalla since deceased.'
4. In the relevant assessment year, i.e., 1969-70, Bhagwati Debi Agarwalla, the widow of Yudhisthir Lal, filed a return disclosing income from the partnership firm, Grand Smithy Works from 1st September, 1967, to 18th December, 1967, only, that is up to the date of death of Yudhisthir Lal. It was claimed that with effect from the 19th December, 1967, the Hindu undivided family which after the death, of Yudhisthir Lal was being managed by her, had no interest in the partnership and that her three minor sons had been individually admitted to the benefits thereof. This contention was not accepted by the Income-tax Officer who included the share of profits accruing to the three minor sons of Yudhisthir Lal for the period 19th December, 1967, to the 31st August, 1968, in the computation of the income of the Hindu undivided family.
5. On appeal the Appellate Assistant Commissioner agreed with the decision of the Income-tax Officer. The assessee went up on further appeal before the Tribunal. It was contended before the Tribunal that, in law, a minor could not represent the Hindu undivided family. It was contended that taking into account the fact that the widow and the other married daughters of the deceased did not remain connected with the partnership firm it ought to be held that the minors having been admitted to the benefits of the partnership were, in law, alone entitled to the share of profits from the firm. It was contended that the Hindu undivided family did not become a partner either legally or factually.
6. It was contended on behalf of the revenue, on the other hand, that the capital of the Hindu undivided family continued to stand in the partnership in the name of late Yudhisthir Lal and was utilised free of interest. In that background the minors having been admitted to the benefits of the partnership it ought to be held that they represented the Hindu undivided family in the partnership.
7. The Tribunal found as a fact the following :
(a) The minors were admitted to the benefits of the partnership.
(b) The minors were heirs or successors of late Yudhisthir Lal.
(c) The capital of the Hindu undivided family continued to be used in the partnership free of interest.
(d) The minors were admittedly the coparceners in the Hindu undivided family.
(e) The income in the names of the minors were earned with the aid and/or on account of the joint family assets.
8. The Tribunal also took into account that the combined share of the three minors was slightly more than that of Yudhisthir Lal.
9. On these facts the Tribunal concluded that the minors were admitted to the benefits of the partnership because they were heirs and successors of Yudhisthir Lal and as the capital of the Hindu undivided family continued to be invested in the partnership free of interest. The Tribunal further found that this continued use of the capital of the Hindu undivided family as capital in the partnership was to the detriment of the family. The Tribunal concluded that the minor's share of the income of the partnership firm was the income of the Hindu undivided family.
10. From the decision of the Tribunal the following questions have been referred to us at the instance of the assessee under Section 256(1) of the Income-tax Act, 1961 :
'1. Whether, on the facts and in the circumstances of the case, and having regard to the legal position, the Tribunal was justified in holding that the three minors were admitted to the benefits of the partnership on account of their being heirs or successors of late Y. L. Agarwalla and for the interest-free use of the capital of the assessee-Hindu undivided family ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the shares of the minors from M/s. Grand Smithy Works were assessable in the hands of the assessee-Hindu undivided family ?'
11. Mr. S. Bhattacharjee, learned counsel for the assessee, has contended before us that the Tribunal went wrong in connecting the income arising from the partnership, in the hands of the minors, with the Hindu undivided family. He also urged that the minors could not be the karta of the Hindu undivided family nor was the Hindu undivided family a party to the admission of the minors to the benefits of the partnership. He contended that the assets of the original Hindu undivided family ceased to be such after the death of Yudhisthir Lal. Under the Hindu Succession Act, the share of Yudhisthir Lal in the undivided family became separate and devolved in the hands of his heirs and legal representatives separately. Mr. S. Bhattacharjee further contended that the fact that no interest was paid to the Hindu undivided family for the use of its capital was irrelevant nor could it be ascertained from the deed of the new firm that the minors were representing the Hindu undivided family. He submitted that the Tribunal's conclusion that the share capital of the Hindu undivided family in the partnership which was there before the death of Yudhisthir Lal, had no connection with the fact that, after the death of Yudhisthir Lal, the minors were allowed to participate in the benefits of the partnership.
12. In support of his contentions Mr. Bhattacharjee has cited a number of decisions. The following decisions were cited for the proposition that it was for the revenue to establish a connection between the income arising to a partner and an Hindu undivided family in which the said partner was a coparcener: (a) Pyare Lal Adhishwar Lal v. Commissioner of Income-tax : (1966)IILLJ759SC , (b) S. RM. CT. PL. Palaniappa Chettiar v. Commissioner of Income-tax : 68ITR221(SC) , (c) Commissioner of Income-tax v. Gurunath V. Dhakappa : 72ITR192(SC) , (d) Commissioner of Income-tax v. D.C. Shah : 73ITR692(SC) and (e) Rajkumar Singh Hukam Chandji v. Commissioner of Income-tax : 78ITR33(SC) .
13. It does not appear to us that the above decisions are of much assistance in the instant case inasmuch as the question involved in the above cases arising in more or less similar facts, was where a karta of a Hindu undivided family received either a remuneration or commission or a salary from the partnership firm in which the capital of the Hindu undivided family was contributed in one form or another, could such remuneration or salary or commission be assessed in the hands of the Hindu undivided family.
14. The dispute before us is entirely different. The minor sons of Yudhisthir Lal arc being given a share of profits of the partnership and not any remuneration or salary or commission for services rendered.
15. Mr. Bhattacharjee also relied on a decision of the Supreme Court in the case of Commissioner of Income-tax v. Rajasthan Mines Ltd. : 78ITR45(SC) for the proposition that even accepting the primary facts found by the Tribunal the court could reject the conclusions arrived at by the Tribunal from such facts. On the strength of this decision Mr. Bhattacharjee invited us to reject the conclusion of the Tribunal in the instant case that the income of the partnership firm falling to the share of the minors was assessable income in the hands of the Hindu undivided family.
16. On careful consideration of the submissions of Mr. Bhattacharjee we are unable to accept the same. In the very decision cited by Mr. Bhattacharjee, Rajkumar Singh Hukam Chandji v. Commissioner of Income-tax : 78ITR33(SC) , tests have been clearly laid down by the Supreme Court as follows (pages 43 and 44 of the report):
'In order to find out whether a given income is that of the person to whom it was purported to have been given or that of his family, several tests have been enumerated in the aforementioned decisions but none of them excepting Kalu Babu's case : 37ITR123(SC) makes reference to the observations of Lord Sumner in Gokul Chand's case AIR 1921 PC 35 that in considering whether gains are partible, there is no valid distinction between the direct use of the joint family funds and a use which qualifies the member to make the gains by his own efforts'. We think that that principle is no more valid. The other tests enumerated are :
(1) whether the income received by a coparcener of a Hindu undivided family as remuneration had any real connection with the investment of the joint family funds;
(2) whether the income received was directly related to any utilization of family assets ;
(3) whether the family had suffered any detriment in the process of realization of the income ; and
(4) whether the income was received with the aid and assistance of the family funds.
17. In our opinion from these subsidiary principles, the broader principle that emerges is whether the remuneration received by the coparcener in substance though not in form was but one of the modes of return made to the family because of the investment of the family funds in the business or whether it was a compensation made for the services rendered by the individual coparcener. If it is the former, it is an income of the Hindu undivided family but if it is the latter, then it is the income of the individual coparcener. If the income was essentially earned as a result of the funds invested the fact that a coparcener has rendered some service would not change the character of the receipt. But if on the other hand it is essentially a remuneration for the services rendered by the coparcener, the circumstance that his services were availed of because of the reason that he was a member of the family which had invested funds in that business or that he had obtained the qualification shares from out of the family funds would not make the receipt, the income of the Hindu undivided family.'
18. In the instant case there cannot be any dispute that the share of the income of the partnership to the benefit of the minors is cot a remuneration. Therefore, we can apply the other tests which have been laid down by the Supreme Court. It appears that the income received by the minors can be said to be directly related to the utilisation of the capital of the Hindu undivided family which has continued to remain in the partnership after the death of Yudhisthir Lal, It also appears that no interest being payable to the Hindu undivided family on account of such capital remaining in the partnership firm the Hindu undivided family is suffering a detriment. The capital of the Hindu undivided family having been retained by the partnership which has carried on business with such capital, it can also be said that the income which the partnership firm was earning was aided and assisted by the use of such funds.
19. On the primary facts as found by the Tribunal all these tests, as laid down by the Supreme Court, are satisfied. Mr. Bhattacharjee has emphasised that no direct nexus has been found between the capital of the Hindu undivided family in the partnership and the admission of the minors to the benefits of such firm. This contention also appears to be without much substance. The undisputed position seems to be that during the lifetime of Yudhisthir Lal, the capital of the Hindu undivided family was being utilised by the partnership firm and Yudhisthir Lal as the karta of the Hindu undivided family was a partner. After the death of Yudhisthir Lal, all that has happened is that instead of Yudhisthir Lal, three minor sons had been admitted to the benefits of the partnership with a right to become full-fledged partners on their attaining majority. The capital of the Hindu undivided family in the partnership firm (diminished only to the extent of the share of the deceased) has remained as it was before the death of Yudhisthir Lal, This position is supported by the decision of the Mysore High Court in the case of Commissioner of Income-tax, v. Smt. Nagarathnamma : 76ITR352(KAR) , which was cited by Mr. Bhattacharjee for the assessee. The direct nexus which was there during the lifetime of Yudhisthir Lal cannot be said to have been snapped by the death of Yudhisthir Lal and by substitution of Yudhisthir Lal in the partnership by his three minor sons.
20. In this view of the matter, the other decision of the Supreme Court cited by Mr. Bhattacharjee in Commissioner of Income-tax v. Rajasthan Mines Ltd. : 78ITR45(SC) does not advance the matter any further. It cannot be said that the Tribunal did not have any basis to come to the conclusion that the income credited to the minor sons of Yudhisthir Lal in the partnership was in fact the income of the Hindu undivided family and could be assessed as such.
21. We do not accept the contention of Mr. Bhattacharjee, that on the death of Yudhisthir Lal the asset of the Hindu undivided family, viz., the capital in the partnership, came to an end. The findings of the Tribunal which we have adverted to earlier are not in our opinion on irrelevant or extraneous matters and the decision in Income-tax Officer v. Murlidhar Bhagwan Das : 52ITR335(SC) cited by Mr. Bhattacharjee does not advance the case of the assessee any further.
22. Now, to come to question No. 1. It has been found as a fact that the minor sons were admitted to the benefits of the partnership. The Tribunal has found that they were so admitted because they were the heirs and successors of Yudhisthir Lal and that the partnership had the interest-free use of the capital of the Hindu undivided family. No other explanation or evidence was adduced or sought to be adduced by the assessee at any stage to show why the minor sons of Yudhisthir Lal were admitted to such benefits. In the absence of any other evidence before the Tribunal and on the facts as found by the Tribunal it cannot be said the Tribunal was unjustified in coming to the conclusion. The question has to be answered in the affirmative and in favour of the revenue.
23. We also hold that the Tribunal was right in concluding that the share of the minors in the income of the partnership was assessable in the hands of the Hindu undivided family, the assessee before us. Accordingly, question No. 2 is also answered in the affirmative and in favour of the revenue.
24. We make no order as to costs.
25. I agree.