judgement:
Appeal No. 151 of 1953.
Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 29th May, 1953, from the Judgment and Order dated the 4th May, 1953, of the Election Tribunal, Allahabad, in Election Petition No. 270 of 1952.
I C. K. Daphtary, Solicitor General for India (G. C. Mathur and C. P. Lal, with him) for the appellant.
Naunit Lal for respondents Nos.
I to 4. 1954.
May 20.
The Judgment of the Court was delivered by GHULAM HASAN J.
This appeal preferred under article 136 of the Constitution against the order, dated May 4, 1951, of the Election Tribunal, Allahabad, setting aside the election of Sri Vashist Narain Sharma to the Uttar Pradesh Legislative Assembly, raises two questions for consideration.
The first question is whether the nomination of one of the rival candidates, Dudh Nath, was improperly accepted by the Returning Officer and the second, whether the result of the election was thereby materially affected.
Eight candidates filed nominations to the Uttar Pradesh Legislative Assembly from Ghazipur (South East) Constituency No. 345, three withdrew their 511 candidature and the contest was confined to the remaining five.
The votes secured by these candidates were as follows 1.
Vashist Narain Sharma 12868 2.
Vireshwar Nath Rai 10996 3.
Mahadeo 3950 4.
Dudh Nath 1983 5.
Gulab Chand 1768 They were arrayed in the election petition as respondents Nos.
I to 5 respectively.
The first respondent having secured the highest number of votes was declared duly elected.
Three electors filed a petition under section 81 of the Representation of the People Act (Act XLIII of 1951) "praying that the election of the returned candidate be declared void and that respondent No. 2 be declared to have been duly elected; in the alternative, that the election be declared wholly void.
The election was sought to be set aside on the grounds, inter alia, that the nomination of respondent No. 4 was improperly accepted by the Election Officer and that the result of the election was thereby materially affected.
The Tribunal found that respondent No. 4, whose name was entered on the electoral roll of Gahmar Constituency Ghazipur (South East) 'personated ' (meaning passed himself off as) Dudh Nath Kahar and used the entries of his electoral roll of Baruin Constituency ghazipur (South West), that the Returning Officer had improperly accepted his nomination, and that the result of the election was thereby materially affected.
Allegations of major and minor corrupt practices and non compliance with certain statutory rules were made but the Tribunal found in favour of the returned candidate on those points.
Dudh Nath, respondent No. 4, is Rajput by caste.
His permanent or ancestral home is Gahmar but since 1943 he had been employed as a teacher in the Hindu Higher Secondary School at Zamania a town 10 or 12 miles away and he had been actually residing at village Baruin which is quite close to Zamania.
The person for whom Dudh Nath 'personated ' is Dudh Nath Kahar whose permanent house is at Jamuan, 512 but his father lives at Baruin.
Dudh Nath Kahar used to visit Baruin off and on but he was employed at Calcutta.
The nomination paper filed by Dudh Nath gave his parentage and age which more properly applied to Dudh Nath Kahar.
He gave his father 's name as Shiv Deni alias Ram Krit.
Ram Krit is the name of Dudh Nath Kahar 's father.
The electoral roll (Exhibit K) of Gahmar gives Dudh Nath 's, father 's name as Shio Deni with no alias and his age as 39, while the electoral roll of Pargana Zamania Monza Baruin (Exhibit C) gives Dudh Nath 's father 's name as Ram Krit and his age as 31.
In the electoral roll of Jamuan Dudh Nath 's age is entered as 34 but in the supplementary list it is mentioned as 30.
When the nomination paper was filed on November 24, 1951, at 2 20 P.m.
it was challenged by Vireshwar Nath Rai on the ground that Dudh Nath 's father 's name was Shivadeni and not Ram Krit but no proof was given in support of the objection and it was overruled on November 27.
This order was passed at 1 P.m. One of the candidates, who later withdrew, filed an application at 3 25 P.m. before the Returning Officer offering to substantiate the objection which the objector had not pressed.
This application was rejected on the ground that the nomination had already been declared as valid.
In point of fact no evidence was adduced.
This acceptance of the nomination on the part of the Returning Officer is challenged as being improper under section 36(6) of the Representation of the People Act and as the result of the election according to the objector has been materially affected by the improper acceptance of this nomination, the Tribunal is bound to declare the election to be wholly void under section 100(1) (c) of the Act.
Mr. Daphtary on behalf of the.
appellant has argued before us with reference to the provisions of sections 33 and 36 that this is not a case of improper acceptance of the nomination paper, because prima facie the nomination paper was valid and an objection having been raised but not pressed or substantiated, the Returning Officer had no option but to accept it.
There was, as he says, nothing improper in the action of the, Returning Officer, On the contrary, 513 it may, according to him, be more appropriately described as a case of an acceptance of an improper nomination paper by the Returning Officer, inasmuch as the nomination paper contained an inherent defect which was not discernible ex facie and could be disclosed only upon an enquiry and upon the taking of evidence as to the identity which was,not then forthcoming.
Such a case, it is argued, is not covered by section (1)(c) but by section 100(2)(c) in which case the election of the returned candidate is alone to be declared void, whereas in the former case the election is wholly void.
We do not propose to express any opinion upon this aspect of the matter, as in our view the appeal can be disposed of on the second question.
Section 33 of the Representation of the People Act, 1951, deals ' with the presentation of nomination paper and lays down the requirements for a valid nomination, On the date fixed for scrutiny of the nominations the Returning Officer is required to examine the nomination paper and decide all objections which may be made to any nomination, and after a summary enquiry.
if any, as he thinks necessary he is entitled to refuse nomination on certain grounds mentioned in sub section (2) of section 36.
Sub section (6) lays down that the Returning Officer shall endorse on each nomination paper his decision accepting or rejecting the same and, if the nomination paper is rejected, shall record in writing a brief statement of his reasons for such rejection.
This sub section shows that where the nomination paper is accepted.
, no reasons are required to be given.
Section 100 gives the grounds for declaring an election to be void.
The material portion is as follows: (1) If the Tribunal is of opinion (a). . . . . . . . (b). . . . . . . . (c)that the result of the election has been materially affected by the improper acceptance or rejection of any nomination, the Tribunal shall declare the election to be wholly void.
It is under this sub section that the election was sought to be set aside, 66 514 Before an election can be declared to be wholly void under section 100(1) (c), the Tribunal must find that "the result of the election has been materially affected.
" These words have been the subject of much controversy before the Election Tribunals and it is agreed that the opinions expressed have not always been uniform or consistent.
These words seem to us to indicate that the result should not be judged by the mere increase or decrease in the total number of votes secured by the returned candidate but by proof of the fact that the wasted votes would have been distributed in such a manner between the contesting candidates as would have brought about the defeat of the returned candidate.
The next question that arises is whether the burden of proving this lies upon the petitioner who objects to the validity of the election.
It appears to us that the volume of opinion preponderates in favour of the view that the burden lies upon the objector.
It would be useful to refer to the corresponding provision in the English Ballot Act, 1872, section 13 of which is as follows: " No election shall be declared invalid by reason of a non compliance with the rules contained in the first schedule to this Act, or any mistake in the use of the forms in the second schedule to this Act, if it appears to the Tribunal having cognizance of the question that the election was conducted in accordance with the principles laid down in the body of this Act, and that such non compliance or mistake did not affect the result of the election." This section indicates that an election is not to be declared invalid if it appears to the Tribunal that non compliance with statutory rules or any mistake in the use of such forms did not affect the result of the election.
This throws the onus on the person who seeks to uphold the election.
The language of section 100(1)(c), however, clearly places a burden upon the objector to substantiate the objection that the result of the election has been materially affected.
On the contrary under the English Act the burden is placed upon the respondent to show the negative, viz., that the result of the decision has not been affected.
This view was expressed 515 in Rai Bahadur Surendra Narayan Sinha vs Amulyadhone Roy & others (1), by a Tribunal presided over by Mr. (later Mr. Justice) Roxburgh.
The contention advanced in that case was that the petitioner having established an irregularity it was the duty of the respondent to show that the result of the election had not been materially affected thereby.
The Tribunal referred to the provisions of section 13 of the Ballot Act and drew a distinction between that section and the provisions of paragraph 7(1) (c) of Corrupt Practices Order which was more or lesson the same lines as section 100(1) (c).
They held that the onus is differently placed by the two provisions.
While under the English Act the Tribunal hearing an election petition is enjoined not to interfere with an election if it appears to it that non compliance with the rules or mistake in the use of forms did not affect the result of the election, the provision of paragraph 7(1) (e) placed the burden on the petitioner.
The Tribunal recognized the difficulty of offering positive proof in such circumstances but expressed the view that they had to interpret and follow the rule as it stood.
In C. M. Karale vs Mr.
B. K. Dalvi etc.
(2), the Tribunal held that the onus of proving that the result had been materially affected rests heavily on the petitioner of proving by affirmative evidence that all or a large number of votes would have come to the returned candidate if the person whose nomination had been improperly accepted had not been in the field.
In Babu Basu Sinha vs Babu Rajandhari Sinha etc.
it was emphasized that it is not enough for the petitioner to show that the result of the election might have been affected but he must show that it was actually affected thereby.
The case of Jagdish Singh vs Shri Rudra Deolal etc.
was one under section 100(1) (c) of the Representation of the People Act.
It was held that the question should always be decided on the basis of the material on the (1) Indian Election Cases by Sen and Poddar, page 188.
(2) Doabia 's Election Cases, Vol. 1 (P. I78).
(3) Indian Election Petitions (Vol.
III) by Shri jagat Narain, page So.
(4) Gazette of India (Extraordinary) October 13, 1953.
516 record and not on mere probabilities.
The Tribunal distinguished between an improper rejection and an improper acceptance of nomination observing that while in the former case there is a presumption that the election had been materially affected, in the latter case the petitioner must prove by affirmative evidence, though it is difficult, that the result had been materially affected.
The learned counsel for the respondents concedes that the burden of proving that the improper acceptance of a nomination has materially affected the result of the election lies upon the petitioner but he argues that the question can arise in one of three ways: (1) where the candidate whose nomination was improperly accepted had secured less votes than the difference between the returned candidate and the candidate securing the next highest number of votes, (2) where the person referred to above secured more votes, and (3) where the person whose nomination has been improperly accepted is the returned candidate himself.
It is agreed that in the first case the result of the election is not materially affected because if all the wasted votes are added to the votes of the candidate securing the highest votes, it will make no difference to the result and the returned candidate will retain the seat.
In the other two cases it is contended that the result is materially affected.
So far as the third case is concerned it may be readily conceded that such would be the conclusion.
But we are not prepared to hold that the mere fact that the wasted votes are greater than the margin of votes between the returned candidate and the candidate securing the next highest number of votes must lead to the necessary inference that the result of the election has been materially affected.
That is a matter which has to be proved and the onus of proving it lies upon the petitioner.
It will not do merely to say that all or a majority of the wasted votes might have gone to the next highest candidate.
The casting of votes at an election depends upon a variety of factors and it is not possible for any 517 one to predicate how many or which proportion of the votes will go to one or the other of the candidates.
While it must be recognised that the petitioner in such a case is confronted with a difficult situation, it is not possible to relieve him of the duty imposed upon him by section 100(1) (c) and hold without evidence that the duty has been discharged.
Should the petitioner fail to adduce satisfactory evidence to enable the ' Court to find in his favour on this point, the inevitable result would be that the Tribunal would not interfere, in his favour and would allow the election to stand.
In two cases [Lakhan Lal Mishra vs Tribeni Kumar etc.
(1) and Mandal Sumitra Devi vs Sri Surajnarain Singh etc.
(2) ], the Election Tribunal, Bhagalpur, had to consider the question of improper acceptance of the nomination paper.
They agreed that the question whether the result of election had been materially affected must be proved by affirmative evidence.
They laid down the following test: "If the number of votes secured by the candidate, whose nomination paper has been improperly accepted, is lower than the difference between the number of votes secured by the successful candidate and the candidate who has secured the next highest number of votes, it is easy to find that the result has not been materially affected.
If, however, the number of votes secured by such a candidate is higher than the difference just mentioned, it is impossible to foresee what the result would have been if that candidate had not been in the field.
It will neither be possible to say that the result would actually have been the same or different nor that it would have been in all probability the same or different." In both the cases the margin of votes between the successful candidates and the next highest candidate was less than the number of votes secured by the candidate whose nomination was improperly accepted.
They held that the result was materially affected.
We are unable to accept the ' soundness of this view.
It seems to us that where the margin of votes is greater (1) Gazette of India (Extry.) Feby.
2, 1953.
(2) Gazette of India (Extry.) Feby.
26,1953.
518 than the votes secured by the candidate whose nomination paper had been improperly accepted, the result is not only materially not affected but not affected at all; but where it is not possible to anticipate the result as in the above mentioned cases, we think that the petitioner must discharge the burden of proving that fact and on his failure to do so, the election must be allowed to stand.
The Tribunal in the present case rightly took the view that they were not impressed with the oral evidence about the probable fate of votes wasted on Dudh Nath Singh, but they went on to observe : "Considering that Dudh Nath respondent No. 4 received more votes than the margin of votes by which respondent No. 1 was returned we are constrained to hold that there was reasonable possibility of respondent No. 2 being elected in place of respondent No. 1, had Dudh Nath not been in the field.
" We are of opinion that the language of section 100(1)(c) is too clear too any speculation about possibilities.
The section clearly lays down that improper acceptance is not to be regarded as fatal to the election unless the Tribunal is of opinion that the result has seen materially affected.
The number of wasted votes was 111.
It is impossible to accept the ipse dixit.
of witnesses coming from one side or the other to say that all or some of the votes would have gone to one or the other on some supposed or imaginary ground.
The question is one of fact and has to be proved by positive evidence.
If the petitioner is unable to adduce evidence in a case such as the present, the only inescapable conclusion to which the Tribunal can come is that the burden is not discharged and that the election must stand.
Such result may operate harshly upon the petitioner seeking to set aside the election on the ground of improper acceptance of a nomination paper, but neither the Tribunal, nor this Court is concerned with the inconvenience resulting from the operation of the law.
How this state of things can be remedied is a matter entirely for the Legislature to consider.
The English Act to which we have referred presents no such conundrum and lays down a. perfectly sensible 519 criterion upon which the Tribunal can proceed to declare its opinion.
It directs the Tribunal not to set aside the election if it is of opinion that the irregularity has not materially affected the result.
Mr. Nauinit Lal argued that the finding that the result of the election has been materially affected is a finding of fact which this Court should not interfere with in special appeal but there is no foundation for the so called finding of fact.
If the Tribunal could not be sure that the respondent No. I would get only 56 out of the wasted votes to give him an absolute majority, how could the Tribunal conjecture that all the wasted votes would go to the second best candidate.
The Tribunal misdirected itself in not comprehending what they had to find and proceeded merely upon a mere possibility.
Their finding upon the matter is speculative and conjectural.
Mr. Naunit Lal also attempted to argue that he could support the decision of the Tribunal on other grounds which had been found against him and referred to the analogy of the Code of Civil Procedure which permits a respondent to take that course.
That provision has no application to an appeal granted by special leave under article 136.
We have no appeal before us on behalf of the respondents and we are unable to allow that question to be reagitated.
The result is that we set aside the order of the Tribunal and hold that it is not proved that the result of the election has been materially affected by an improper acceptance of the nomination, assuming that the case falls within the purview of section 36(6) and that finding is correct.
We accordingly set aside the order of the Tribunal and uphold the election of the appellant.
The appellant will get his costs from :the respondents incurred here and in the proceedings before the Tribunal.
Order accordingly.

summary/full:
The words "the result of the election has been materially affected" in section 100 (1) (c) of the Representation of the People , indicate that the result should not be judged by the mere increase or decrease in the total number of votes secured by the returned candidate but by proof of the fact that the wasted votes would have been distributed in such a manner between the contesting candidates as would have brought about the defeat of the returned candidate.
Section 100 (1) (c) clearly places a burden on the objector to substantiate the objection that the result of the election has been materially affected by the improper acceptance or rejection of the nomination paper.
The said section is too clear for any.
speculation about possibilities and it lays down that improper acceptance is not to be regarded as fatal to the election unless the Tribunal is of opinion that the result has been materially affected.
If an Election Tribunal misdirects itself in not comprehending the real question before it and proceeds merely on possibilities, speculation and conjecture, its order must be set aside.


judgement:
Appeals Nos. 817 and 818 of 1966.
Appeals by special leave from the judgment and order dated January 19, 1965 of the Mysore High Court in I.T.R.C. No. 1 of 1964.
Niren De, Attorney General, section C. Manchanda and R. N. Sach they, for the appellant.
597 M. C. Chagla, Sharad J. Mhaispurkar, O. P. Malhotra and O. C. Mathur, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
The respondent is a Hindu Undivided Family (hereinafter called the assessee) of which Shri D. C. Shah is the karta.
The assessment years are 1959 60 and 1960 61 and the relevant accounting periods are Samvat years 2014 and 2015.
The assessee through its karta Shri D. C. Shah was a partner in the firms of (1) M/s C. U. Shah and Co. and (2) M/s Oriental Can Manufacturing Co. as per terms and conditions set out in the Instruments of Partnership dated 5 6 1961 and 11 9 1957.
Shri D. C. Shah was paid a remuneration of Rs. 12,000/ per 1 year for both the assessment years by M/s C. U. Shah and Company.
He was paid Rs. 10,000/ for the assessment year 1959 60 by the Oriental Can Manufacturing Company.
The amounts received by Shri D. C. Shah were shown by the assessee in its, returns of income along with balance of the share income from the aforesaid firms.
The Income Tax Officer in assessing the Hindu Undivided Family included the remuneration received by Shri D. C. Shah as a part of the share income from the respective firms.
Before the Appellate Assistant Commissioner the assessee contended that remuneration received by Shri D. C. Shah was his personal income and the amounts were wrongly shown in the returns of the ' Hindu Undivided Family as its income and should not have been included in the assessment.
In so contending the assessee relied on clauses 8, 9 and 10 of the Instrument of Partnership dated 5 6 1961 by which the firm of M/s C. U. Shah and Company was constituted.
The assessee also relied on clauses 14, 15 and 16 of the Instrument of Partnership dated 11 9 1957 by which the firm of M/s Oriental Can Manufacturing Company was constituted.
Clauses 8, 9 and 10 of the Instrument of Partnership dated 5 6 1961 are to the following effect "8.
The partner No. 1 Shri D. C. Shah who has been managing the business of this firm shall hereinafter also continue to act as Managing partner for conducting the said business free from any interference of other partners, of whatsoever nature.
The said Managing partner shall manage, direct, appoint: and/or remove any one of the employees, and/or do all other things, which include right to draw cheques, to make, deliver and accept documents either legal or commercial in respect of the partnership business as may be deemed necessary for effectively carrying on the partnership business.
The said Managing partner shall be paid Rs. 1,000/ (Rupees one thousand only) per month in addition to all other benefits that he is entitled to enjoy as a partner of the firm.
588 9.
The said Managing partner shall continue to be the Managing Partner for his life time or his retirement whichever is earlier.
All other partners shall devote as much time to the furtherance of the partnership business as they think proper,.
necessary and a visable".
Clauses 14,,15 and 16 of the Instrument of Partnership dated 11 9 1957 are to the following effect : "14.
The partner No. 2 shall, be the Managing Partner for conducting the said business free.
from any interference of whatsoever nature by others.
The said Managing Partner shall manage, carry, direct, appoint and/or remove any of the employees and/or Agent and do all other things, as may be deemed necessary, for effectively carrying on the Partnership business.
The said Managing Partner shall be entitled, in addition to all other benefits, to a monthly remuneration of Rs% 2,000/ (Rupees two thousand only).
The Partner No 2 shall continue to be the Managing Partner for his lifetime or retirement.
In the event of Partner No. 2 's demise or retirement, whichever is earlier, the Partner No. 1 shall then act and perform duties and functions of Managing Partner.
In the event of the demise or retirement of Partner No. 1, the Managing Partner shall be appointed by the remaining partners or their legal representatives, as the case may be, 16.
Partner No. 3 shall be responsible for the duties and functions to be performed under the direction of No. 2, the Managing Partner.
In the event of failure on the part of No. 3 to perform duties and functions or otherwise entrusted by No. 2, the Managing Partner, the matter shall be referred to No. 2 and his decision shall be binding on No. 3".
The Appellate Assistant Commissioner accepted the contention of the assessee and held that the remuneration paid and re ceived by Shri D. C Shah should be deleted from the assessment of the assessee.
The Income Tax Officer thereafter preferred appeals to the Income Tax Tribunal which set aside the order of the Appellate Assistant Commissioner and held that the remuneration paid should be included in the total income of the assessee.
At the instance of the assessee, the Income Tax Appellate Tribunal stated a case to the High Court on the following question of law : "Whether on the facts and in the circumstances of the ease.
, was the salary received by D. C. Shah from the 589 two firms of M/s C. U. Shah & Co. and M/s Oriental Can Manufacturing Co., includible in the assessment of the H.U.F. of which Shri D. C. Shah was the Karta?" The High Court relying upon its earlier decision in Gurunath V. Dhakappa vs Commissioner of Income tax, Mysore (1) held that the salary received by Shri D. C. Shah from the aforesaid firms cannot be included in the assessment of the Hindu Undivided Family of which he was the karta.
These appeals are brought by special leave on behalf of the Commissioner of, Income Tax, Bangalore from the judgment of the Mysore High Court, dated 19th January, 1965 in Income Tax Reference No. 1 of 1964.
The question whether the remuneration earned by a member of a Hindu Undivided Family as an officer of a company or.
a firm in which the assets of the Hindu Undivided Family have either been invested or the office has been acquired with the aid of the funds of the family is the income of the family or the individual income of the member has been the subject matter of consideration in several cases before this Court.
In V. D. Dhanwatey vs Commissioner of Income tax(2), V the karta of a Hindu Undivided Family contributed to the capital of a firm out of the funds of the family.
Under the agreement of the partnership the general management and supervision of the partnership business was to be in the hands of V and he was to be paid a monthly remuneration out of the gross earnings of the partnership business.
It was found that V joined the partnership as representing the family and became a partner on account of the investments of the joint family assets in the capital of the partnership and that the remuneration received by V was only an increased share of the profits paid to him as representing the family.
In this state of facts it was held by this Court that the remuneration paid to V was directly related to the investments of the assets of the family in the partnership business and "there was a real and sufficient connection between the investment from the joint family funds and the remuneration paid to V".
It was therefore held by this Court that the salary paid to V was, rightly assessed as the income of the Hindu Undivided Family.
In M. D. Dhanwatey vs Commissioner of Income Tax(1) the facts were parallel to the facts in V. D. Dhanwatey 's case (2 ) and the salary received by the karta of the Hindu Undivided Family was treated as the income of the family.
In section R. M. CT.
Palaniappa Chettiar V. Commissioner of Income Tax(4), the material facts were different.
The karta of a Hindu Undivided Family acquired 90 out of 300 shares in a transport company with the funds of the family.
In course of time he (1) (2) (3) (4) L10Sup./69 3 became the Managing Director of the Company.
As Managing Director the karta was entitled to salary and commission on the.
net profits of the company, and was entrusted with control over the financial and administrative affairs of the company.
The, only qualification under the Articles of Association for the office of a Director, was the holding of not less than 25 shares in his own right.
It was found that the shares were acquired by the family not with the object that the karta should become the Managing, Director, but in the ordinary course of investment and there was no real connection between the investment of the joint family funds in the purchase of the shares and the appointment of the karta as Managing Director of the company.
It was held therefore that the remuneration of the Managing Director was not earned on account of any detriment to the joint family assets and the amounts received by the karta as Managing Director 's remuneration, commission and 'sitting fee ' were not assessable as the income of the Hindu Undivided Family.
In P. N. Krishna Iyer V. Commissioner 'of Income Tax Kerala(1), the principle laid down in V. D. Dhanwatey,s case(2) was applied.
It was held that the remuneration received by the assessee from the company of which he was the Managing Director together with commission and 'sitting fee ' , should be included in the assessment of the Hindu Undivided Family.
It was pointed out that the shares which qualified the assessee to become a member of the company were purchased with the aid of the joint family funds.
The shares which were allotted to the assessee in lieu of this services were also treated as shares belonging to the joint family.
The entire capital assets of the company originally belonged to the joint family and were made available to the company in consideration of a mere promise to pay the amount for which the assets were valued.
The income was primarily earned by utilising the joint family assets or funds and the mere fact that in the process of gaining the advantage an element of personal service or skill or labour was involved did not alter the character of the income.
In cases of this class the character of the receipt must be determined by reference to its source, its relation to the assets of the family and the proximity of the connection between the investment from the joint family funds and the remuneration paid.
Applying the principle laid down in V. D. Dhanwatey 's case(3), it was held that the tribunal wag justified in holding that the income from the salary, commission or 'sitting fee ' obtained by the assessee did not represent his individual income but was the income of the Hindu Undivided Family of, which he was the karta.
(1) (2) 591 In Commissioner of Income Tax, Mysore vs G. V. Dhakappa(1), the principle laid down in V. D. Dhanwatey,s(2) case was applied again.
It was held that there was no finding that the income which was received by G. V. Dhakappa was directly related to any assets of the family utilised in the partnership, and, therefore, the income of G., V. Dhakappa cannot be treated as the income of the Hindu Undivided Family.
In our opinion, the present case falls within the principle laid down by this Court in S.R.M. CT.
Palaniappa Chettiar 's case(3).
It has been found that Shri D. C. Shah was a man of rich experience in the line of business which these two firms were carrying on.
Clauses 9 and 10 of the Partnership deed dated 5 6 1961 indicate that the remuneration was paid not because of the family funds invested in the partnership but for the personal qualification of Shri D. C. Shah.
In the case of Oriental Can Manufacturing Company clause 14 provided for Shri K. K. Dhote being appointed as the Managing partner.
After the said Shri Dhote retired Shri D. C. Shah was appointed as the Managing partner during the assessment year 1959 60.
Clause 15 of the partnership deed provided for such an appointment.
A reading of clauses 14, 15 and 16 of the Partnership Deed indicates that the remuneration was paid for the specific acts of management done by Shri D. C. Shah resting on his personal qualification and not because he represented the firm.
It should also be noticed that no other partner was paid any salary.
Upon the particular facts of this case, it is manifest that there was no real or sufficient connection between the investment of the joint family funds and the remuneration paid by the partnership to Shri D. C. Shah.
It follows that the remuneration of Shri D. C. Shah was not earned on account of any detriment to the joint family assets and the amounts of remuneration received by Shri D. C. Shah as the Managing partner of the two partnerships were not assessable as income of the Hindu Undivided Family.
For these reasons we hold that there is no merit in these appeals which are accordingly dismissed with costs.
There will be one hearing fee.
Y.P. Appeals dismissed.
(1) Civil Appeal No. 713 of 1965 decided on 23 7 1968.

dataset_name: IN-Abs

summary/full:
The assessee a Hindu undivided family through its karta was a partner in two firms.
The Karta had rich experience in the line of business carried on by the firms.
in one of the firms, the Karta was appointed as its Managing Partner and paid a remuneration as Managing Partner in addition to the benefits enjoyed as a partner.
in the other firm, another partner was appointed as the Managing Partner, and it was provided that on his retirement, the Karta was to be appointed as the Managing Partner and entitled to the remunerations.
The Karta was appointed the Managing Partner of the second firm also on the retirement of its earlier Managing Partner.
The assessee family claimed that the remunerations received by the Karta as Managing Partner should be deleted from the assessment of the assessee, and they were the personal income of the Karta.
HELD: The remuneration of the Karta was not earned on account of any detriment to the joint family assets and the accounts received by the Karta as the Managing Partner of the two partnerships were not assessable as the income of the Hindu undivided family.
[591 F], Upon the facts of the case, there was no real or sufficient connection between the investment of the joint family funds and the remuneration paid by the partners to the Karta.
The remuneration was paid not because of the family funds invested ' in the partnership, but for the personal qualifications of the Karta.
[591 D F] S, R. M.CT. PL.
Palaniappa Chettiar vs Commissioner of Income tax, , followed.
Gurunath V. Dhakappa vs Commissioner of Income tax, Mysore, ; V. D. Dhanwatey vs Commissioner of Income tax, ; M. D. Dhanwatey V. Commissioner of Income tax, ; P. N. 'Krishna Iyer vs Commissioner of Income tax Kerala, and Commissioner of Income tax, Mysore vs G V. Dhakappa, Civil Appeal No. 713 of 1965 decided on 23 7 1968, referred to.