MANGILAL RUNGTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case, the assessee is an HUF consisting of M. L. Rungta (Mangilal Rungta) and his sons. Three of those sons are M. G. Rungta (Madan Gopal Rungta), B. N. Rungta (Bishwanath Rungta) and S. R. Rungta (Sitaram Rungta). The question which arises for decision in this case relates to the income from Jugasalai Electric Supply Co. The assessee's case is that shares are held in the Electric Supply Co. as follows :

(2.) THE assessment years in question are 1945 -46, 1946 -47, 1947 -48 and 1948 -49. But the assessment in respect of each of the assessment years does not have to be separately considered because the point involved is the same. The ITO held that the shares allotted to M. G. Rungta, B. N. Rungta and S. R. Rungta in the Jugasalai Electric Supply Co. were all held by the HUF in their names, as the funds said to have been contributed by these coparceners of the family to the Electric Supply Co. were the funds of the HUF. The assessee took an appeal to the AAC of Income - tax in respect of each of the assessment years but the appeals failed. The assessee then took a further appeal in respect of each of the assessment years to the Tribunal and the Tribunal, by its order dated the 3rd July, 1952, held that the share standing in the name of Sitaram Rungta was held by him in his individual capacity. It, however, dismissed the appeals in respect of the shares held in the names of M. G. Rungta and B. N. Rungta. On being required by a Bench of this Court under S. 66(2) of the IT Act to do so, the Tribunal has stated a case and has referred it on the following questions of law : -

(3.) APPEARING for the assessee Mr. Dutta has drawn our attention to the abstracts of accounts appearing at pages 86 to 91 of the paper book. The account book of the firm Harkarandass Mangilall of Calcutta, in which the assessee family is admittedly interested, shows that M. G. M . L. Rungta (as representing the HUF) as. 4 M.G. Rungta 4 B. N. Rungta 4 S. R. Rungta 2 An outsider 2 Rungta deposited a total amount of Rs. 20,000 on different dates and B. N. Rungta deposited a sum of Rs. 20,000 in one lump sum with this firm in the account of Jugasalai Electric Supply Co. The whole of this amount of Rs. 40,000 was transferred to the assessee family and the account book of the assessee family shows that it was credited to the Electric Supply Co. The account book of the Electric Supply Co. shows that this company received from the assessee family Rs. 64,847 - 7 -3 partly as value of goods purchased and partly in cash. It further shows that the capital of this company was made up as follows : -