Bhandari, C.J. - (1.) THIS is a reference under Section 66 of the Indian Income Tax Act.
(2.) SIR Sobha Singh and his four sons S. Bhagwant Singh, S. Khushwant Singh. Major Gurbakhsh Singh and S. Daljit Singh were members of a Hindu undivided family up to 31-3-1947 when by mutual consent they became divided in status inter se and agreed to divide their joint family properties. As the total assets of the Hindu undivided family valued at Rs. 45,36,756/- and as the debts outstanding against the said Hindu undivided family aggregated to Rs. 1,7,32,391/11/6 and as the net value after deducting the total liabilities from the total assets was Rs. 28,04,364/- it was agreed that SIR Sobha Singh shall be separate owner of property of the value of Rs. 5,64,364/-and that each of his four sons shall be separate owner of property of the value of Rs. 5,60,000/-. The property which fell to the share of S. Bhagwant Singh was as follows : 1. Half share in Regal Building valued Rs. 8,00,000 A formal deed of partition relating to the movable and immovable properties, securities, assets and liabilities was executed on 9-6-1947. In November 1947 S. Bhagwant Singh sold the property known as No. 7, Prithviraj Road, New Delhi, for a sum of Rs. 6,00,000/-, and invested a part of the proceeds thereof (over Rs. 1,50,000/-) as his capital contribution in a new partnership concern known as Sir Sobha Singh and Company (Builders), Nagpur, which was constituted on 11-12-1947. He was to have a -/6/-anna share in the partnership business and was to be paid a sum of Rs. 1500/- per mensem as his remuneration. On 31-8-1951 S. Bhagwant Singh filed two returns, one in the capacity of an individual declaring his share income from the firm Sir Sobha Singh and Company, Nagpur at Rs. 31,348/-, and another in the status of Hindu undivided family on an income of Rs. 23,455/7/-. On 25-2-1953 he filed a revised return for the Hindu undivided family status on an income of Rs. 39,470/-. He stated that when he was separated from the bigger Hindu undivided family on 31-3-1947 he was given the family property known as 7 Prithviraj Road as his exclusive share in lieu of the services rendered by him and that as such this property did not form part of the property which had fallen to his share on partition. He stated that income from this property was his personal income and consequently that his share of income from the Nagpur firm from the investment from his personal capital should be treated as his personal income and separate from his Hindu undivided family income. He accordingly claimed the income of his share from the firm at Nagpur as his individual income and objected to this income being clubbed with his Hindu undivided family income. The Income Tax Officer was unable to accept this contention, for he was of the opinion that S. Bhagwant Singh did not get the property in question for the services rendered by him but got it as his share in the Hindu undivided family property like his other brothers and consequently that it could not be treated as his personal acquisition. The two returns were therefore treated as a single return and the status of the assessee was taken as that of Hindu undivided family. The order of the Income Tax Officer was upheld by the Appellate Assistant Commissioner. On further appeal the Appellate Tribunal came to the conclusion that for the purpose of entering into the partnership at Nagpur, S. Bhagwant Singh had utilised family funds, that his income from the partnership business could not be regarded as other than joint family income, and that the salary of Rs. 1500/- per mensem which he received from the firm and which was doubtless earned with the aid of family funds could not be treated as his self-acquired property. At the request of S. Bhagwant Singh the Tribunal has referred the following questions to this Court, namely: (1) Whether on the facts and in the circumstances of the case the further sum of Rs. 1,40,000/- given to S. Bhagwant Singh by his father on the partition of the family property belonged to S. Bhagwant Singh in his individual capacity? (2) Whether on the facts and in the circumstances of this case the share of S. Bhagwant Singh in the profits of the firm styled as Sir Sobha Singh and Company (Builders), Nagour, belonged to S. Bhagwant Singh in his individual capacity? . (3) Whether on the facts and in the circumstances of this case the salary of Rs. 1500/- per mensem received by S. Bhagwant Singh from the firm styled as Sir Sobha Singh and Company (Builders), Nagpur, was the income of S. Bhagwant Singh in his individual capacity? The Commissioner of Income Tax suggested that Question No. 1 may be reframed as follows : "Whether on the facts and in the circumstances of the case the House No. 7 Prithiraj Road then valued at Rs. l,40,000/- and alleged to have been given to S. Bhagwant Singh by his father as an extra share on the partition of the family property, belonged to S. Bhagwant Singh in his individual capacity?" The Tribunal did not consider it necessary to reframe Question No. 1 on the lines indicated by the Commissioner of Income Tax.
(3.) THE circumstances in which the property known as 7 Prithviraj Road (valued at Rs. 1,40,000/-in the partition deed) is alleged to have been given to S. Bhagwant Singh, may now be stated. THEse circumstances appear in a letter dated the 30th April 1953 which was addressed by Sir Sobha Singh to the Income Tax Officer during the course of the assessment proceedings. THE letter is in the following terms : "Subject : Claim of S. Bhagwant Singh that the property known as 7, Prithviraj Road was given to him in lieu of services rendered by him to the family. Dear Sir, In connection with the above, I have plea-sure to confirm that after the division of the family assets was agreed upon between the family members, S. Bhagwant Singh my eldest son represented to me that be should lie given an extra share for the contrition made by him to the common pool by working with me for a period of nearly twenty years. I accepted his claim and thereupon decided that he should be given the property known as 7, Prithiviraj Road in lieu of services rendered by him, To give effect to this decision I credited him with the sum of Rs; 1,40,000/- in the books of Messrs Sujan Singh Sobha Singh and debited to the account of Messrs Sujan Singh Sobha Singh. Unfortunately, the necessary correction in the partition deed consequent upon the change made by me on the representation of S. Bhagwant Singh was not made. THE deed therefore was registered in the original form but the entry made by me in the books of Messrs Sujan Singh Sobha Sing was given effect to by me and by S. Bhagwant Singh during the last several years. I therefore affirm that the claim made by S. Bhagwant Singh is true and correct and is not an after thought. It is needless to add that I was the karta of the family till 31-3-1947 after which date came the division of assets between myself and my four sons." This communication makes it quite clear that S. Bhagwant Singh was given the property known as 7, Prithviraj Road in lieu of the services rendered by him and that a sum of Rs. I,40,000/- was credited to his account in the books of Messrs Sujan Singh Sobha Singh, The first question of law therefore which arises for decision is whether on the facts and in the circumstances of this case the House No. 7 Prithviraj Road then valued Rs. 1,40,000/- and alleged to have been given to S. Bhagwant Singh by his father as an extra share on partition of the family, belonged to S. Bhagwant Singh in his individual capacity. I shall proceed to answer this question. A number of circumstances militate against the assertion that Sir Sobha Singh transferred the Prithviraj Road House to S. Bhagwant Singh in his individual capacity either for services rendered to the family or for some other reasons. In the first place, the family of which Sir Sobha Singh was the Karta disrupted on or before 31-3-1947, and the entire property belonging to the joint family was distributed among the several co-parceners. If Sir Sobba Singh ceased to be Karta of the Joint Hindu family by reason of this partition and if the property of the joint family came to vest in the several co-parceners on 31-3-1947, he had no power after that date to transfer the Prithviraj Road house to S. Bhagwant Singh without the consent of the sons of S. Bhagwant Singh and without payment of any compensation to the family which was deprived of property of the value of Rs. 6,00,000/-. Secondly, Sir Sobha Singh had no power to transfer this property to S. Bhagwant Singh by way of gift, for under the Hindu law a father has no power of making a gift of immovable property except for pious purposes. Even gifts of ancestral movable property can be made within reasonable limits. Thirdly, it is significant that although the house was actually sold for a sum of Rs. 6,00,0007/-. Sir Sobha Singh gave a credit only of Rs. 1.40,000/- to S. Bhagwant Singh, indicating thereby that the gift, if any was not of the house but of a sum of Rs. 1,40,000/-. Fourthly, it will be noticed that the deed of partition which was executed on 9-6-1947 contains no mention of the gift of this property to S. Bhagwant Singh. These obvious difficulties compelled S. Bhagwant Singh to take up some-what different and inconsistent pleas before different tribunals. His case before the Income tax Officer and later before the Appellate Tribunal was that the Kothi was given to him as a personal gift. He was unable, however, to maintain this stand, and Mr. Kirpal who represented him in this Court was constrain ed to admit that what was gifted to his client was not a Kothi but a sum of Rs. 1,40,000/-. He en-deavoured to bolster up the stand by putting up an argument which is as ingenious as it is farfetched. Instead of making a straightforward admission that when Sir Sobha Singh gifted a sum of Rs. 1,40,000/- to him, S. Bhagwant Singh became a creditor of the firm Sujan Singh Sobha Singh in this sum, Mr. Kirpal put forward a somewhat longwinded submission. He contended that as soon as the gift of Rs. 1,40,000/- was made to S. Bhagwant Singh the debts due by the joint family headed by S. Bhagwant Singh were reduced by a corresponding figure, that S. Bhagwant Singh became a creditor of the said family to the extent of Rs. 1,40,000/-, that he recovered this sum by the sale of the Prithvirai Road house, that he invested this sum in the partnership business at Nagpur and consequently that this sum of Rs. 1,40,000/- belonged to him in his individual capacity. This contention appears to me to be wholly untenable for the reason already given, namely that when Sir Sobha Singh made a gift of this large sum of money to S. Bhagwant Singh the latter became a creditor of the firm Sujan Singh Sobha Singh. He did not acquire any right or interest in the property known as 7, Prithvirai Road, New Delhi, which had come to vest in the joint family headed by S. Bhagwant Singh by virtue of the partition agreement and the subsequent deed of partition. The question whether this house belonged to S. Bhagwant Singh in his individual capacity must, therefore, be answered in the negative. ;