COMMISSIONER OF INCOME TAX Vs. RAMPRASAD MEHRA

JUDGEMENT

(1.) THIS is a reference under section 66 (1) of the Indian Income tax Act 1922 (hereinafter referred to as 'the Act') at the instance of the revenue.

(2.) ONE Balmukchand has five sons. Two of them of them are Ramgopal and Ramprasad. The five sons of Balmukchand and a son of one of the sons carry on business in partnership under the name and style of Kishanchand Bros. This firm is registered under section 26A of the Act Ramgopal a minor son, an unmarried minor daughter and a wife and they form a joint Hindu undivided family. So also Ramprasad has a minor son an unmarried daughter and a wife and they form, a joint Hindu undivided family. Both Ramgopal and Ramprasad are possessed of individual and separate properties. By two separate declarations made on March 26, 1959 Ramgopal and Ramprasad declared that 500 fully paid up shares of a limited company benumb Messrs. Ramgopal Private Ltd. are thrown into the common hotchpot of the joint Hindu undivided family and from the date of the said declaration the said 500 shares belonged to the joint Hindu undivided families and they shall not have any interest or title therein in their individual capacity. The questions referred to us relate to whether the income of the shares can be assessable in the hands of Ramgopal and Ramprasad are entitled; to refund of tax deducted at source on the divided income of the said 500 shares. The two question framed by the Tribunal are as under :

(3.) FOR the purpose of this reference it cannot be disputed that if the dividend income of these 500 shares is not assessable in the hands of Ramgopal and Ramprasad under the provision of either section 16 (1) (c) or section 16 (3) (b) of the Act then undoubtedly, the two Hindu undivided families will be entitled to the refund claimed by them. The question whether such income should be included in the income of Ramgopal and Ramprasad either under the provisions of the section 16 (1) (c) or section 16 (3) (b) of the Act is concluded by decisions which are binding on us and we therefore do not think it necessary to discuss the question in greater detail Section 16 (1) (c) provided as under :