LexP. N. KRISHNA IYER versus COMMISSIONER OF INCOME-TAX, KERALA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
P. N. KRISHNA IYER
v.
COMMISSIONER OF INCOME-TAX, KERALA
September 3, 1968
943 •
B
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.]
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Indian Income-tax Act, 1922, s. 3 and
s.
33B-Hindu
undivided
family business taken over by
company~Karta appointed . Governing
Director-Salary, Commissioner 'sitting fee' of Governing Director whe-
ther assessable in hands of Hindu undivided family-Principles for dtcid-
ing--Commissioner's powers under. s. 33B-Scope of.
The appellant, on partition of joint family property between himself
and his brothers, got as his share the family's motor transport business
which had been established by his efforts, along with 'the workshop, stores,
agency, cinema companies etc.'
The Hindu undivided family c~nsisting
of the appellant and his sons tran·sferred the motor transpo'rt busmes~ to
a private limited company; the company credited the account of
the
family in its books with the value of the asscls of the business taken over
by it.
With family money !he appellant purchased 100 shares. of the
company and was appointed-according to tne terms of the Articles of
ASsociation-as its Governing Director for hfe. at a salary of Rs. 3,000
per month with 15% commission on net profits. He was also in lieu of
his experienc~ and his serviecs to the business, allotted 4,880 fully paid np
shares of the company; the dividend from these, when declared,
was
credited to the account o.f the Hindu undivided family.
In proceedings
for assessment the Income-tax Officer brought to tax in the assessment year
1954-55 the remuneration received by the appellant from the com~any
together with the commission, sitting fee, and income from property busi-
ness and other sources as the separate income of
tile
appellant.
The
Appellate Assistant Commissioner modified the order and in carrying out
his directions the Income-tax Officer included the income from property
business and other sources in the income of the Hindu undivided family
and made corresponding modifications in the assessment of the appellant
as an individual.
But the Commissioner of Income-tax being of the
opinion that the order of the Income-tax OfBcer was prejudicial to the
revenue revised the said order under s. 33B of the Income-tax Act, 1922
and included the appellant's income from salar:;, commission and 'silting
fee' in the total income of the Hindu undivided family.
The Trfounal
reversed the order of the Commissioner.
In reference the High Court
upheld the order of the Commissioner.
The appel1ant in his capacity
as karta of the family appealed to the Supreme Court and contended :
(i) that the Commissioner had no power under s. 33B to revise the order
of the Income-tax Officer after it had been carried in appeal to the Appel-
late Assistant Commissioner, n.o'r could he tcvbe an order made by the
Income-tax Officer in pursuance of the direction by the Appellate Ass13tant
Commissioner; (ii) that the salary, commission and 'sitting fee' were his
individual income and not that of the Hindu Undivided Family;
HELD : (i) There was no ground for holding that the Commissioner
had attempted to revise the order of the Appellate Assistant Commissioner.
In computing the income of the appellant as an individual the Appellate
.A·ssistant Commissioner had directed ce'rtain mod1ftcations to be rnade,
and pursuant thereto the asses.sments of the appellant and of the llindu
undivided family of which the appellant was the karta were rectified.
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• 944
St;PREME conn REPORTS
(1969] I S.C.R
The oi:der of assessment of the Hindu undivided famil 1 was never chal-
A
fengcd in appeal.
·1ne (~ommissioncr had DO\\'Cr to revise the order of
the Income-tax Officer which had not been appealed from. [947 D-1'1
Modification in the order of th~ Income-tax Offic~·r in ~o far as it
related to the assessment of the appellant as an individual was a .:onse-
quential order made in order to avoid double
as'V...~s1aent· of ~h~ ~ante
income.
Therefore, the fact that the asi;essn1cnt of tl!e appellant a.; an
individual had become final before th~ order of the Commissioner <lid
B
not bar the exercise of the ('ommissioncr's pO\\'Cr un<lcr :-.. 338. [947 1~-G]
(ii) Income received hy a _n1ember of a i'i1ndu un<l;vi<lcd family from
a firm or a l"'Ompany in which the funds of th~ llindu undividerl f1.1mi1y
are invested. even thou.~h the income may be partiall) traceExcerpt shown. Read the full judgment & AI analysis in Lexace.