COMMISSIONER OF WEALTH TAX Vs. NARAYAN DASS SADANI

JUDGEMENT

(1.) THIS is a reference under s. 27(1) of the WT Act, made under circumstances hereinafter stated.

(2.) THE assessee is one Narayandass (alias Naraindas) Sadani. He has a one-half share in three immovable properties in Calcutta. THE other one-half share belongs to his brother, Ramnarayan Sadani. THE assessment years in question are 1957-58 and 1958-59 and the corresponding valuation dates are Akshaya Tritia day of 2014 and 2015 S. Y. THE point in dispute is the status in which the assessee is to be assessed to wealth-tax. THE assessee is the son of one Amarchand and grandson of one Lachmandas. Lachmandas was a Hindu governed by the Mitakshara school. Amarchand was his only son. Amarchand had five sons, viz., (1) Sewnarain (2) Harnarain, (3) Ramnarain, (4) Naraindas and (5) Lachminarayan. THE last- mentioned son was born in the year 1934. Amarchand used to do business in the name of Lachmandas Amarchand, as the sole proprietor, and owned several properties in Calcutta and Bikaner. It is not disputed that the business and the properties were self-acquired in the hands of Amarchand. On 4th May, 1927, when Amarchand had only four sons born to him, he executed three deeds--the first one giving some immovable properties in Calcutta and Bikaner to Sewnarain, the second one giving some properties in Calcutta and Bikaner to Harnarain and the third one giving to Ramnarain and Narayandass in two equal shares some immovable properties in Calcutta and Bikaner. In this reference we are concerned with the interpretation of the third deed only. Amarchand also converted his proprietary business into a partnership, by a deed also bearing the date 4th May, 1927. Under the deed of partnership he retained, for himself, 5 annas 4 pies share and gave to each of his four sons, then in existence, two annas eight pies share. He also divided the capital in the account standing in his name in the proprietary business between himself and his four sons so that each of his four sons mentioned above got Rs. 1,25,000 and he himself retained an amount of Rs. 2,50,000. We shall refer to the relevant terms of the deed of gift and the deed of partnership hereafter.

(3.) AGGRIEVED by the order made by the Tribunal, the CWT applied for and obtained reference of the following question of law to this Court , namely :