LOKENATH PRASAD DHANDHANIA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The Commissioner of Income-tax has submitted a statement of the facts which are relevant to the question formulated at p. 26 by a Bench of this Court on 30 March 1939. The question formulated may be conveniently stated here: Is the assessee as donee under the deed of gift from Debi Prasad, dated 13 May 1938 entitled to have registration of a firm consisting of himself as the donee of the one part and the joint Hindu family of which he is a karta of the other part? The facts found by the Commissioner are not disputed and may be briefly reproduced thus: The geneological table of the family of the assessee is given at p. 23. It shows that the original ancestor of this family was one Bhudarmal who had four sons, Chandi Prasad, Durga Prasad, Rai Bahadur Debi Prasad and Lakhi Prasad. Chandi Prasad was the father of Lokenath and Radha Krishna. Lokenath has two. sons Badribishal, a major, and Kishorilal, a minor. It appears that on 26 January, 1920, Chandi Prasad had become of unsound mind and the other members of the family, that is to say Lokenath, Durga Prasad, Debi Prasad and Lakhi Prasad entered into a deed of partnership on a contractual basis having a four annas share each in the family properties.

(2.) In 1923 Durga Prasad and Lakhi Prasad withdrew from the partnership and the business then became the business of Rai Bahadur Debi Prasad and Lokenath in equal shares. On 21 February 1930, a fresh deed in confirmation of this situation was drawn up between Rai Bahadur Debi Prasad and Lokenath, and the firm as such was registered by the Income-tax Officer. On 13 May 1933, Rai Bahadur Debi Prasad made a gift of his interest in favour of Lokenath absolutely. The recitals in the deed of gift are that the property will go to Lokenath and his sons generation after generation.

(3.) This has been treated by the Income-tax Department as meaning that the donee was not Lokenath in his absolute capacity but that the donee was the joint Hindu family . of Lokenath and his two sons. It is clear that this interpretation is incorrect. The recitals in the deed amply justify the conclusion which was sought to be drawn by the learned Advocate that Lokenath became the absolute owner of the share which before that date belonged to Rai Bahadur Debi Prasad.