GOVIND SHARAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee was and is at all material times a HUF of which Govind Sharan is the eldest male member and the "karta" of the family business. This joint Hindu family consists of Govind Sharan, his widowed grand mother, Smt. Laxmi Devi, his sons, Laxman Prasad, Badri Prasad, Ramesh Chandra, Suresh and Mahesh. THE assessment year in question is 1962-63 and the corresponding previous year is the year ending on November 7, 1961.

(2.) LAXMAN Prasad started a business on November 30, 1960, in the name of M/s. LAXMAN Prasad Ramesh Chandra. The business was that of commission agent in grains. The initial capital of Rs. 41,000 is said to have been transferred to LAXMAN Prasad by his grandmother, Smt. Laxmi Devi. In the books of accounts, the amount was credited in the name of LAXMAN Prasad Ramesh Chandra. Accounts were opened in the same name with three banks, namely, State Bank of Bikaner and Jaipur, Punjab National Bank and Central Bank of India. The "karta" of the joint Hindu family Govind Sharan was also entitled to operate the accounts and overdraft facilities were obtained from the banks on the guarantee of the joint family business.

(3.) OBTAINING of overdraft facilities by Laxman Prasad Ramesh Chandra does not come within the precinct of aid and assistance of the joint Hindu family and as such it could not be considered as a determining factor for holding the profits earned by Laxman Prasad Ramesh Chandra as joint Hindu family income. Giving of 'a guarantee by the joint family also cannot be termed to be an earning on account of an act detriment to the joint family property. The statements of Smt. Laxmi Devi and Laxman Prasad clearly reveal that there was no connection between the family funds and the business of Laxman Prasad Ramesh Chandra. Placing reliance on Metal Box Company of India Ltd. v. Their Workmen [1969] 73 ITR 53 (SC), Rajkumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33 (SC) and Satinder Kumar v. CIT [1977] 106 ITR 64 (HP), learned counsel for the assessee urged that there was no real or sufficient connection between the joint family funds and earnings of Laxman Prasad Ramesh Chandra.