S.K. Mal Lodha, J. - (1.) BY this consolidated order, we propose to answer the common question referred in these references.
(2.) D.B.I.T. Reference No. 24 of 1978 relates to the assessment years 1965-66 and 1966-67. D.B.I.T. Reference No. 39 of 1980 is in respect of the assessment years 1967-68 to 1978-79. D.B.I.T. References Nos. 26 of 1978, 17 of 1984 and 49 of 1980, relate to the assessment years 1966-67, 1970-71, 1971-72 and 1972-73 respectively. In D.B. Income-tax Reference No. 5 of 1981, the assessment year involved is 1971-72. The following question, which is common in the aforesaid six references, is said to arise out of the orders of the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ("the Tribunal" herein) : "Whether, in the facts and in the circumstances of the case, the Tribunal was right in holding that the registration or continuation of registration could not be refused to the assessee ?" The answer to this question involves a finding on the question whether Birdhichand, in his capacity as karta of Hindu undivided family could take first one of his sons and thereafter both his sons as partners even though they have not contributed anything as capital out of their self-acquired funds. Learned counsel for the parties submits that a Division Bench of this court in Gulraj Poonamchand v. CIT, 1984 148 ITR 326 after considering the arguments and submissions made on behalf of the Revenue and the assessee and after going through the various authorities cited by them, held as under (at p. 331) : "In our view, it is permissible for a karta of a HUF representing the Hindu undivided family to enter into a partnership with any other member of the Hindu undivided family, or any stranger who is taken in partnership even as working partner and, even if they did not contribute any separate or individual property of their own (Underlining is ours)." This view was based on CIT v. Gaekwade Vasappa [1983] 143 ITR 1 (AP), wherein, reliance was placed on I.P. Munavalli v. CIT [1969] 74 ITR 529 (Mys), which was followed in Ramachandra Navalraj v. CIT [1981] 130 ITR 826 (MP) and CIT v. Gupta Brothers [1981] 131 ITR 492 (All). It may be stated that Pitamberadas Bhikhabhai & Co. v. CIT [1964] 53 ITR 341 (Guj), and Shah Prabhudas Gulabchand v. CIT [1970] 77 ITR 870 (Bom) were distinguished and were not followed in Gaekwade Vasappa & Sons' case [1983] 143 ITR 1 (AP). The basic authority in this connection, to which reference may be made is Lachhman Das v. CIT [1948] 16 ITR 35 (PC), wherein it was laid down that there can be a valid partnership between a karta of a Hindu undivided family representing the family on the one hand and a member of that family in his individual capacity on the other.
(3.) IT may be mentioned that a somewhat similar view was taken in CIT v. Mariappa Muthiriyar & Sons [1985] 154 ITR 466, wherein, the learned Judges of the Madras High Court held that there could be a valid partnership between the karta of a Hindu undivided family and one or more of its coparceners in their individual capacity, while still remaining joint if the coparcener contribute to the partnership what is admittedly his separate properly held in his individual capacity and unconnected with the family funds and such a partnership can be entered into not only for commencing a new business, but also in respect of an existing joint family business and such a firm would be entitled to registration. Their Lordships of the Supreme Court in Ratanchand Darbarilal v. CIT [1985] 155 ITR 720 held that the members of a joint family or coparceners can, without disturbing the status of the joint family or coparcenary, acquire separate property and run independent partnership business for themselves. In that connection, reliance was placed on R.C. Mitter & Sons v. CIT [1959] 36 ITR 194 (SC) and Ladhu Ram Taparia v. CIT [ 1962 ] 44 ITR 521 (SC). Mr. B.R. Arora, learned counsel for the Revenue is quite fair in submitting that the answer to the question involved in these cases, will be governed by Gulraj Poonamchand's case [1984] 148 ITR 326 (Raj). We have carefully read the decision in Gulraj Poonamchand's case. Having considered the reasons given by the learned Judges, with which we agree, we hold that a karta of a Hindu undivided family who represents the Hindu undivided family can enter into partnership with other member or members of the Hindu undivided family, who is/are taken in partnership as working partner(s), though they had not contributed any separate or individual property of their own. We respectfully follow Gulraj Poonamchand's case [1984] 148 ITR 326 (Raj). It follows from this, that Birdhichand, who was the karta of the Hindu undivided family at the relevant time, could take his son/s as partner/s despite that his son/s as partners had not contributed anything by way of capital out of his self-acquired funds. ;