M/S. PIYARE LAL ADISHWAR LAL versus THE COMMISSIONER OF INCOME-TAX, DELHI.

Citation: [1960] 3 S.C.R. 669 · Decided: 26-04-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

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3 S.C.R. 
SUPREME COURT REPORTS 
669 
M/S. PIYARE LAL ADISHWAR LAL 
v. 
THE COMMISSIONER OF INCOME-TAX, DELHI. 
(S. K. DAS, J. L. KAPUR and M. HIDAYATULLAH, JJ.) 
Income Tax-Agreement between Treasurer and Bank--Cons-
truction-Treasur~r, whether servant of Bank-Treasurer furnish-
ing security of joint family property-Emoluments received 
by 
Treasurer, whether income of joint f amily-lndian Income-tax Act, 
1922 (1] of 1922) SS. 7 JO. 
S was the karta of the Hindu undivided family, consisting of 
himself and his younger brother. Their father was the Treasurer 
of a Bank till his death in 1950. 
During his father's lifetime S 
was employed as an overseer in the Bank on a salary of Rs. 400 
a month, and, subsequently, 
after his father's death · he was 
appointed Treasurer of the 
Bank at Delhi 
and sixteen 
other 
branches of the Bank. 
As Treasurer he furnished security to the 
Bank of ceriain properties of the Hindu undivided family. 
The 
agreement dated September 19, 1950, between him and the Bank, 
showed that he was appointed Treasurer on a monthly salary of 
Rs. 1,750 and he 
was also paid 
certain sums of 
money for 
guaranteeing the conduct of the cashiers and other members of 
the Cash Department Staff which he was . required to employ 
with the 
approval of the Bank. 
He was to carry out his ·duties 
as directed by the Bank and if in the discharge of his duties he 
caused. any loss to the Bank he was liable to make good the loss. 
He was not required to serve personally, but his services could be 
terminated by notice. In the vear of account 1950-51 he received 
from the Bank a sum of Rs. 23.286 as Treasurer. The Income-tax 
authorities considered 
that this sum 
was not the 
individual 
income of S as salary but was part of the income of the Hindu 
undivided family and taxed it as such on the grounds (1) that 
the agreement between S and the Bank showed that the relation-
ship between them was no~ one of master and servant but that 
of an employer and independent contractor and that the emolu-
ments 
received by 
the 
Treasurer were 
profits and gains of 
business, (2) that 
S was appointed Treasurer not on account of 
any personal qualification but because his father was a Treasurer 
--r- of the Bank before him, and (3) that as the security furnished by 
S came out of the joint family properties, the emoluments could 
IJOt be said to have been earned without detriment to the family 
property and therefore were part of the Hindu undivided family: 
Held, (1) That on the 
true construction 
of the agreement 
dated September 19, 1950, 
the Treasurer was a servant of the 
Bank. 
Sivanandan Sharma v. The Puniab National Bank Ltd. [1955] 
1 S.C.R. 1427 and Dharangadlzara Chemical Works Ltd. v. State of 
Saurashtra, [1957] S.C.R. 152, relied on. 
(2) That in view of the fact that there was nothing to show 
that S had received any particular training at the expense of the 
23-6 SCI/ND/82 
1960 
April 26. 
196G 
Piyare 
Lal 
Adishwar Lai 
v. 
Commissioner of 
Income-tax, 
Delhi 
• 
Kapur J. 
670 
SUPREME COURT REPORTS 
[1960] 
family funds or that his appointmen_t as Treasurer was the result 
of any 
outlay or 
expenditure of or 
detriment to the family 
property, but on the other hand his previous experience as an 
overseer of the 
Bank was indicative of personal fitness for his 
appointment as 
Treasurer, the mere fact he 
had lodged joint 
family property by way of security would not make his earnings 
as Treasurer part of the income of the Hindu undivided family. 
The use of the 
words 
"risk of" 
and 
"detriment to" 
in 
Gokul Chand v. Firm Hukum Chand Nath Mal, (1921) L.R. 48 
I.A. 162, explained. 
Commissioner of Income-tax v. Kalu Babu Lal Chand, [1960] 
1 S.C.R. 320, distinguished. 
Accordingly, 
the emoluments received 
by S were 
in the 
nature of salary and therccore assessable under s. 7 of the Indian 
Incom<;-tax Act, 1922, and not under s. 10 of the Act as profits 
and gains of business, and the salary 
was the income of the 
individual, S, and not the income of the Hindu undivided family. 
CrvIL APPELLATE JimrsmcTION: Civil Appeal No. 
123 of 1957. 
Appeal from the judgment and order dated May 
12, 1955, of the Punjab High Court in Civil Reference 
No. l 7 /1953. 
. 
A. V. Viswanatha Sastri, S. N. Andley, ]. B. Dada-
chanji, Ramcshwar Nath and P. L. Vohra, 
for 
the 
appellants. 
C. K. Daphtary, Solicitor-General of India, R. Gana-
pathy Iyer and D. Gupta, for the respondent. 
1960. A

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