CHARANDAS HARIDAS AND ANOTHER versus THE COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, KUTCH, SAURASHTRA AND AHMEDABAD & ANOTHER

Citation: [1960] 3 S.C.R. 296 · Decided: 15-03-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

IH fd.' 
B1rt4bori Union 
c£. E#changd of 
Encloues 
z960 
Mllrch .15. 
296 
SUPREME COURT REPORTS 
[1960) 
as indicated above ; in that case Parliament may 
have to pass a law on those lines under Art. 368 and 
then follow it up with a law relatable to the amendeJ 
Art. 3 to implement the agreement. 
Q. 3. 
Same as answers (a), (b) and (c) to Question 2. 
Reference answered accordingly. 
CHARANDAS HARIDAS AND ANOTHER 
v. 
THE COMMISSIONER OF INCOME-TAX, 
BOMBAY NORTH, KUTCH, SAURASHTRA 
AND AHMEDABAD & ANOTHER 
(S. K. DAB, J. L. KAPUR and M. HIDAYATULLAH, JJ.) 
Income-tax-Income from managing agency-Karla of Hindu 
undivided family becoming partner of managing agency firm-Income 
therefrom assessed as family income-Subsequent partition of managing 
agency comtnission-Claim for assessnzen-t as 1"11dividual income of 
divided members. 
C, who was the Karta of the Hindu undivided family con-
sisting of his \\'ifC, three sons and himself, was a partner in six 
managing agency firms in six Mills, and the income received by 
him as partner was being assessed as that of the Hindu undivided 
family for the purposes of income-tax. On December 31, 1945, C, 
acting for his three minor sons and himself, and his wif~ entered 
into an oral agreement for a partial partition, \Vi'.th effect fron1 
January 1, 1946, by which C gave a certain share to his daughter 
in the managing agency commission from two of the six managing 
agencies held by the family and the balance together with the 
shares in the other managing agencies was divided into five equal 
shares between C, his wife and sons. 
The agreement was subse-
quently recorded in a document <lated September II, 1946, which 
recited, inter alia: "By this partition we decided that \Vhatever 
commission fell due till 31-12-45 and which is received after 
31-12-45 should be kept joint and in r:espect of the commission 
which accrues from 1-1-46 and received after that date each of 
us become absolute owner of his one-fifth share and therefore 
from the date, i.e., from 1-1-46 these commissions cease to be the 
joint property of our family." 
For the assessment years 1947-48 
and 1948-49, C claimed that the incoine from the managing 
agency firms should no longer be treated as the income of the 
Hindu undivided family but as the separate income of the divided 
members, )Jut the Income-tax authorities rejected the claim on the 
grounds that by the document in question the division was of 
th• inrome and not of the assets from which the income wa 
IO..·-· 
' 
-
... 
4-
' -
3 S.C.R. SUPREME COURT REPORTS 
297 
derived and since income-tax was payable at the moment of time 
I96o 
when income accrued, this income must be taken to have accrued 
to the ~indu undivided family: 
Charandas Haridas 
Held, that inasmuch as there was no other effective mode 
v. 
of partitioning this asset and further in view of tlie finding that Commissioner 01 
Incom•-tax 
the partition was not a pretence, the asset must be treated as 
divided for purposes of income-tax law and the income was not 
assessable as the income of the Hindu undivided family. 
CIVIL APPELI,ATE JURISDICTION: Civil Appeal No. 
108of1957. 
Appeal by special leave from the judgment and 
order dated February 16, 1955, of the Bombay High 
Court in Income-tax Reference No. 35/x of 1954. 
A. V. Viswanatha Sastri, B. K. B. Naidu and I. N. 
Shroff, for the appellants. 
0. K. Daphtary, Solicitor-General of I_ndia K. N. 
Rajagopal Sastri and D. Gupta, for the respondents. 
1960. March 15. The Judgment of the Court was 
delivered by 
HIDAYATULLAH, J.-This is an appeal with the Hidayalullah J. 
special leave of this Court against the judgment and 
order dated February 16, 1955, of the High Court of 
Bombay in an I!J.come-tax Reference under s. 66(2) of 
the Indian,Income-tax Act. 
The appellants are two assessees, Charandas Hari-
das and Chinubhai Haridas, whose cases are identical, 
and, in fact, there was a consolidated reference by the 
Income-tax Appellate Tribunal, which was answered 
by the High Court by its judgment. The respondents 
are respectively the ·Commissioner of Income-tax, 
Bombay North, Kutch and Saurashtra and the Com-
missioner of Income-tax, Delhi, Ajmer, Rajasthan and 
Madhya Bharat. The two appellants represented 
two units of Hindu undivided families. 
Charandas 
Haridas represented his wife, three sons and himself, 
and Chinubhai Haridas represented his wife, son ~nd 
himself. In stating the facts relative to the two 
famil

Excerpt shown. Read the full judgment & AI analysis in Lexace.