# TOLARAM BIJOY KUMAR v. COMMISSIONER OF INCOME TAX, ASSAM

- **Citation:** [1978] 2 S.C.R. 834
- **Court:** Supreme Court of India
- **Decided:** 1978-02-14
- **Case number:** CIVIL APPELLATE J URISDICTION : Civil Appeal No. 1980 of 1972
- **Bench:** M. H. Beg, P. N. Bhagwatj, V. D. Tulzapurkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tolaram-bijoy-kumar-v-commissioner-of-income-tax-assam-7437
- **Pages:** 5

## Headnote

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Hindu Undivided Family business, Partition ofNawre & character of the
share of tlie property of a coparce11er after, parti1io11-Wlre1her assessab{e as
individual properly or as H.U.F.-lncome Tax Act. 1922.
The income from the business of Nathmal Tolaram carried on by Narmal
was assessed as Hindu Undivided Family im:ome till 1950.
After the death of
Narmal in 1945, the business was partitioned w.d . 6th April 1949 and by a
deed of partnership executed on 7th April 1949, the business carried on at two
places, Dhubri and Gauripore, was converted by his three sons Srinivas, Nathmal
& Tolaram, into a partnership business.
Jn this deed, it was admitted that th«i
business had been carried on previous to the partition as Hindu Undivided
Family business.
On an application u/ s 25A of the Income Tax Act, 1922 the
said partition was .recorded and registered in the files of the tax authority on
17th August 1954. On 28-3-1959, the firm of. M /s. Nathmal Tolaram was dissolved and a new firm Nathmal Tolaram (Petrol Depot) came into existence.
Jn the assessment year 1959-60, Tolaram claimed that his share in this partnership business should be assessed separately as his individual income. His claim
was rejected by the Income Tax Officer, but wa~ accepted in appeal. However
a similar claim for the relevant assessment year 1960-61, to separate assessment
of income derived from . the partnership business in petrol amounting to Rs.
21,746 /-, ,-,·as rejected by the Income Tax Officer.
On further appeals, the
Appellate Assistant Commissioner and the Tribunal affirmed the order of the
Income Tax Officer. The High Court also answered the reference in favour of
Revenue.
HELD : Partition only cuts off the claim of the dividing coparceners. When
a coparcener receives his share· of the joint family property on a partition, such
property in the hands of the coparcener belongs to the Hindu Undivided family
as the share of the property is taken by him only as representing his branch.
The statt1s of such coparcener on partition is not that uf an individual. [837 A-DJ
Jn the instant case, the share of Tolaram in the partne r~h iμ which c:•me into
bei•.1g on the partition Qf the Hindu Undivided Family could not be regarded as
his separate property. Jt became the property of the Joint Hindu Family of
Tolararn and his sons since the business prior to the partition of the Hindu
Undivided family was assessed as joint family business and the partition deed
sig'rled by Tolaram and others itself contained a recital '.o that effect. [838 B-CI
N. V. Rnre11dranath v. Commi.uioner of WM/th Tax, Andhra Pradc'l11, 74
I. T. R. 190; followed.
Chiranji/al v. Commissioner of Income Tax, (1965) 56 J.T.R. p. 715 @
722 referred to.
CIVIL APPELLATE J URISDICTION : Civil Appeal No. 1980 of 1972.
Appeal by Special Leave from the Judgment and
Order dated
26-5-1 972 of the Assam & Nagaland High Court in I.T.R. No. 6 of
1968.
B. B. Ahuja and S. K. Nandy, for the Appellant.
T. A. Ramachandran and R. N. Sachthey, for the Respondent.
.>--
I
TOLARAM v. C.I.T. (Beg, C.J.)
835

## Text

834
TOLARAM BIJOY KUMAR
v.
COMMISSIONER OF INCOME TAX, ASSAM
February 14, 1978
B
[M. H. BEG, C. J., P. N. BHAGWATJ & V. D. TULZAPURKAR, JJ.]
c
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E
F
G
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Hindu Undivided Family business, Partition ofNawre & character of the
share of tlie property of a coparce11er after, parti1io11-Wlre1her assessab{e as
individual properly or as H.U.F.-lncome Tax Act. 1922.
The income from the business of Nathmal Tolaram carried on by Narmal
was assessed as Hindu Undivided Family im:ome till 1950.
After the death of
Narmal in 1945, the business was partitioned w.d . 6th April 1949 and by a
deed of partnership executed on 7th April 1949, the business carried on at two
places, Dhubri and Gauripore, was converted by his three sons Srinivas, Nathmal
& Tolaram, into a partnership business.
Jn this deed, it was admitted that th«i
business had been carried on previous to the partition as Hindu Undivided
Family business.
On an application u/ s 25A of the Income Tax Act, 1922 the
said partition was .recorded and registered in the files of the tax authority on
17th August 1954. On 28-3-1959, the firm of. M /s. Nathmal Tolaram was dissolved and a new firm Nathmal Tolaram (Petrol Depot) came into existence.
Jn the assessment year 1959-60, Tolaram claimed that his share in this partnership business should be assessed separately as his individual income. His claim
was rejected by the Income Tax Officer, but wa~ accepted in appeal. However
a similar claim for the relevant assessment year 1960-61, to separate assessment
of income derived from . the partnership business in petrol amounting to Rs.
21,746 /-, ,-,·as rejected by the Income Tax Officer.
On further appeals, the
Appellate Assistant Commissioner and the Tribunal affirmed the order of the
Income Tax Officer. The High Court also answered the reference in favour of
Revenue.
HELD : Partition only cuts off the claim of the dividing coparceners. When
a coparcener receives his share· of the joint family property on a partition, such
property in the hands of the coparcener belongs to the Hindu Undivided family
as the share of the property is taken by him only as representing his branch.
The statt1s of such coparcener on partition is not that uf an individual. [837 A-DJ
Jn the instant case, the share of Tolaram in the partne r~h iμ which c:•me into
bei•.1g on the partition Qf the Hindu Undivided Family could not be regarded as
his separate property. Jt became the property of the Joint Hindu Family of
Tolararn and his sons since the business prior to the partition of the Hindu
Undivided family was assessed as joint family business and the partition deed
sig'rled by Tolaram and others itself contained a recital '.o that effect. [838 B-CI
N. V. Rnre11dranath v. Commi.uioner of WM/th Tax, Andhra Pradc'l11, 74
I. T. R. 190; followed.
Chiranji/al v. Commissioner of Income Tax, (1965) 56 J.T.R. p. 715 @
722 referred to.
CIVIL APPELLATE J URISDICTION : Civil Appeal No. 1980 of 1972.
Appeal by Special Leave from the Judgment and
Order dated
26-5-1 972 of the Assam & Nagaland High Court in I.T.R. No. 6 of
1968.
B. B. Ahuja and S. K. Nandy, for the Appellant.
T. A. Ramachandran and R. N. Sachthey, for the Respondent.
.>--
I
TOLARAM v. C.I.T. (Beg, C.J.)
835
The Judgment of the Court was delivered by
BEG, C.J.-The appellant, a Hinda Undivided Family, is before us
by special leave through its Karla Tolaram. The statement of the case
shows that Narmal, who
died in the year
1945, left three sons :
Srinivas, Nathmal and Tolaram.
Narmal had carried on an Hindn
undivided family business started roundabout 1925. It appears that
A
the name of the business was changed to Nathmal Tolaram from 1936B
37 and that the income of the business was assessed as Hindu Undivided Family income since then. The previous records do not seem
to be very clear, but, from the year 1942 to 1950, the income of this
business was certainly assessed as Hindu
Undivided Family income.
It was partitioned with effect from 6th April, 1949. After the partition, the business carried on at two places, Dhubri and Gauripore, was
converted into a partnership business evidenced by a deed of partner- c
ship executed by the three brothers on 7th April, 1949. In this deed,
it was admitted that the business had been carried on previous to the
partition a·s Hindu Undivided Family business.
On 19th September, J 950, an application was made under section
25A of the Income-tax Act, 1922, to record and register the partition.
This was done on 17th August, 1954.
On 28th March. 1959. the
firm of M/s. Nathmal Tolaram was dissolved and a new firm Nathmal D
Tolaram (Petrol Depot) came into existence. Jn the assessment year,
1959-60 Tolaram claimed that his share in the partnership husine·ss
~hould be assessed separately as his individual income. His claim was
rejected by the Income-tax Officer, but was accepted in appeal.
We then come to the relevant assessment year 1960-61, when
Tolaram made a similar claim to separate assessment of income derived · E
from the partnership business in petrol amountin:; to Rs. 21,746/-,
The Income-ta Officer rejected this claim. The Appellate Assistant
Commissioner also, on an appeal, after reviewing the entire set of
facts and circumstances in the light of fresh materials which were
available, affirmed the order of the Income-tax Officer rejecting the
claim of the appellant.
The Income-tax Tribunal and then the High
Court also affirmed this posiiton.
F
The appellant, however, obtained special leave to appeal from the
judgment of the High Court deciding the following question framed
before it against the appellant :
"Whether on the facts and in the circumstances of the
case, the Tribunal was justified in
holding that the share"
income of Rs. 21,746/- from
Messrs
Nathmal
Tolaram
G
(Petrol Depot) was assessable in the hands of the assessee
family"?
The position seems to be clear in law.
The following passage in
Mulla's Hindu Law, Fourteenth Edition, at p. 278 has been quoted
and relied upon by the High Court :
"228. Property jointly acquired.-(!) Where
property
H
has bten acquired in business by persons constituting a joint
Hindu family by their joint labour, the question arises whether
the property so acquired is joint family property, or whether
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836
SUPREME
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[1978] 2 S·C·R·
tt is merely the joint property of the joint
acquirers, or
whether it is ordinary partnership property. If it is joint
family property, the male issue of the acquirers take an interest in it by birth (s. 221, sub. s. (1). lf it is the joint property of the acquirers, it will pass by survivorship, but the
male issue of the acquirers does not take interest in it by
birth (s. 221, sub. s. 2). lf it is partnership property, it is
governed by the provisions of the Indian Partnership Act,
1932, so that the sham of each of the joint acquirers will
pass on his death to his heirs, and not by survivorship.
(2) If the property so acquired is acquired with the aid
ot joint family property, it becomes joint family property.
(3) If the property so acquired is acquired without the
aid of joint family property, the presumption is that it is the
join! property of the joint acquirers, but this presumption may
be rebutted by proof that the persons constituting the joint
family acquired the property not as members of a joint family,
but as members of an ordinary trade partnership resting on
contract, in which case the property will be deemed to be
partnership property".
In the case before u's the finding of fact was that the property was
not acquired as partnership property under a contract, but the part- ·
nership business was originally prior to partition Hindu Undivided
Family business. Hence, there was no room for applying the principle
that members of a joint Hindu family had not acquired the business
\
~
E as members of a joint family but in a separate capacity a:s individual
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partners under a contract.
The High Court rightly relied upon N. V. Narendranath v. Com-
~
missioner of Wealth tax, Andlrra Pradesh,(') where this Court bad
observed :
"In the present case the property which is sought to be
taxed in the hands of the appellant originally belonged to the
Hindu undivided family belonging to the appellant, his father
and his brothers. There were joint family properties of that
Hindu undivided family when the partition took place between
the appellant, his father and his brothers and these properties
came to the share of the appellant and the
question presented for determination is whether they ceased to bear the
character of joint family properties and became the absolute
properties of the appellant.
As pointed out by the Judicial
Committee in Arunachalam's case (1957
A.C. 540) it is
only by analysing the nature of the rights of the members of
the undivided family, both those in being and those yet to be
born, that it can be determined whether the family property
can properly be described a:s "joint property of the undivided
family.
Applying this test it is clear, though in the absence
(I) 741.T.R. 190.
"-.
/ T
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TOLARAM v. C.J.T. (Beft, C.J.)
837
-0f male issue the dividing coparcener may be properly des-
·Cribed in a sense as the owner of the properties, that upon
the adoption of a son or birth of a son to him, it would
l!ssume a different quality. It continues to be ancestral property in his hands as regards his male issue for their rights
had already attached upon it and the partition only cuts off
the claim of the dividing coparceners.
The father and his
male issue still remain joint. The same rule would apply even
when a partition had been made before the b.irth cf the male
issue or before a son is adopted, for the share which is taken
at a partition by one of the coparceners is taken by him as
representing his branch. Again, the ownership of the dividing
.coparcener is such "that female members of the family may
have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it". See Arunachalam' s case. It is evident that these are the incidents
which arise because the properties have been and have not
ceased to he joint family properties. It is no doubt true that
there was a partition between the assessee, his wife dnd minor
daughters on the one hand and his father and brothers on the
other hand.
But the effect of partition did not affect the
character of these properties which did not cease to be joint
family properties in the hands of the appellant. Our conclusion is that when a coparcener having a wife and two minor
daughters and no son receives his share ·of the joint family
properties on partition, such property in the hands of the
coparcener belongs to the Hindu undivided family of him'self,
his wife and minor daughter and cannot be assessed as his
individual property.
It is clear that the present case falls
within the ratio of the decision of this Court in Gowli Buddannds case (60 I.T.R. 293) and the Appellate Tribunal was
right in holding that the status of the re·spondent was that of
a Hindu undivided family and not that of an individual".
Learned Counsel for the appellant had relied on Chiranii Lal v.
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Commi.rsioner of lncometax, U.P.,(') where a Division Bench of the
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Allahabad High Court had observed (at p. 722) :
"Once a partial partition is accepted as being genuine
and not a colourable or sham transaction, the share of capital
of each such coparcener thereafter ceases to be joint family
asset and becomes his individual asset de hors the family,
and thereafter it is not possible to say that the nucleus for
the new partnership business came from the Hindu undivided
family funds. The share income derived by the investment of
such funds in a partnership bu'siness cannot be included in
the assessment of the Hindu undivided family, unless it can be
shown that the individual members who derived the share
income had blended it with the income of the smaller Hindu
undivided family or were nominees or benamidars for their
family.
No attempt has been made by the department to
{I) f 1965) 56 I.T.R. p. 715@ 722.
15-119 SCJ/78
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838
SUPREME
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[1978] 2 S·C·R·
prove any snch thing. There was thus no material whatsoever
for the finding of the Tribunal that the nucleus in respect of
the capital which was duly divided in the books of the firm
after partial partition still continued to be the nucleus of the
funds belonging to the larger or the smaller joint family".
In the case before us there is no difficulty in determinini: the character of any nucleus of divided
property.
The business prior to the
partition of the Hindu undivided family was a'ssessed as joint family
business for a number of years without any protest by Tolaram. The
partition deed signed by Tolaram and others itself contained a recital
!hat the business was a joint family
business.
The finding of fact
reached by the Tribunal that the business was, until partition, a joint
family business could not be said to be unreasonable or perverse. If
that be so, the share of Tolaram in the partnership which came into
being on th.e partition of the Hindu Undivided Family could not 1'e
regarded as his separate property. It became the property of the joint
Hindu family of Tolaram and his sons.
This is the finding of fact,
quite reasonably arrived at by the Tribunal, which the High Court had
accepted.
·
Consequently, me are unable to accept the arguments put forward
by Mr. Ahuja with considerable persistence before us. We dismiss this
appeal. But, in the circumstances of the case, we make no order as to
costs.
S.R.
Appeal dismissed.
•
•