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PETITIONER: RAM BILAS

       Vs.

RESPONDENT: JAGAT NARAIN SHRIVASTAVA

DATE OF JUDGMENT24/02/1993

BENCH:

ACT:

HEADNOTE:

JUDGMENT:                            ORDER 1.This  appeal is preferred against the judgment  of  the Madras High Court answering the question referred to it,  at the  instance  of  the Revenue, against  the  Revenue.   The question referred is :               "Whether on the facts and in the circumstances               of the case, the Tribunal was right in law  in               holding  that  the  assessee’s  share  in  the               partnership   firm   of  M/s   Erode   Service               constituted a separate and individual property               and  not  the  property of  the  joint  family               consisting of himself and his five sons?" 2.One  Angappa  Mudaliar  had  five  sons  including  the assessee.   There  was a complete  partition  among  Angappa Mudaliar  and  his  five sons in the year  1943.   The  said partition  was also accepted and recorded by the Income  Tax Department under Section 25-A of the Indian Income Tax  Act, 1922.   Angappa  Mudaliar died on January 25,  1962  leaving behind  him  certain assets.  The question  is  whether  the share obtained by the assessee in his father’s assets in his separate  property?  The High Court has answered  it  saying that it is governed by Section 8 of Hindu Succession Act and therefore  the  said share is his separate  property.   This question  has since been concluded by the decision  of  this Court in CWT v. Chander Sen1 which has also been followed in CIT  v.  P.L Karuppan Chettiar2.  It is held  that  in  such circumstances  the share obtained by the son is governed  by Section 8 of Hindu Succession Act and therefore his separate property.  The appeal is accordingly dismissed.  No costs. 1    (1986)  3 SCC 567: 1986 SCC (Tax) 641: (1986)  161  ITR 370 2  1993 Supp (1) SCC 580: (1992) 197 ITR 646 113 RAM BILAS v. JAGAT NARAIN SHRIVASTAVA ORDER 1.These appeals by special leave are against the judgment of the High Court dated March 19, 1974 in Second Appeal  No. 370  of 1971 and the order dated March 18,  1976,  rejecting the  review  application against the main order.   The  High Court  allowed  the defendant’s second appeal  by  the  main order, after the defendant had failed in the trial court  as well as in the first appellate court. 2.The  suit  property  is  a  house  in  Faizabad.    The

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defendant-respondent,  now  substituted by his  LRs,  was  a tenant in the suit house when the house was purchased by the appellants  on  February 8, 1968 for a sum of Rs  3750,  the sale  deed  being executed by Smt Chinta Devi, wife  of  Ram Shanker Lal, and their children, Lava Shanker and Smt  Shail Bala.   The house belonged originally to Ramjas Lai,  father of Ram Shanker Lai who died in 1944.  The whereabouts of Ram Shanker  Lai were unknown and he was not heard by  even  his wife and children for a long time prior to execution of  the sale  deed in appellant’s favour on February 8,  1968.   The exact  date from which Ram Shanker Lai was not heard  of  or seen  by any of his close relations is not clear.   However, in  the sale deed itself, it was mentioned by his  wife  and children that the said Ram Shanker Lai had not been heard of or  seen by any one of them for more than seven years  prior to the date of execution of that sale deed.  It may also  be mentioned that the statement of the defendant, Jagat Narain, forming  part of the record, made before the Nazul  Officer, Faizabad  on  July 8, 1958 contains his admission  that  his maternal uncle Ramjas Lai had died 15 years earlier and  the whereabouts of his son, Ram Shanker Lai were not known  from the  lifetime  of his father, and that Ram Shanker  Lai  had most probably died.  This would indicate that even according to the defendant’s statement recorded in the year 1958,  Ram Shanker Lai was presumed to have been dead at that time. 3.The  appellant after purchasing the suit house  in  the above  manner  instituted  a  suit  for  ejectment  of   the defendant-respondent  also claiming therein arrears of  rent in  view of the fact that the defendant had  admittedly  not paid any rent to him.  The defendant contested the suit on a vague plea.  The defendant contended that a loan of Rs  1500 was taken by Ramjas Lai from him which he did not repay  and after  the death of Ramjas Lai, his son Ram Shanker Lai  had agreed that in lieu of the loan the defendant could obtain a sale  deed.   The defendant further pleaded that  to  honour that statement, the defendant was also 114 given possession.  It is sufficient to say that the pleading of the defendant did not amount to setting up acquisition of title by him in any manner prescribed by law. 4.The  trial court decreed the suit and  the  defendant’s first  appeal was dismissed.  Thereafter, the second  appeal by  the defendant has been allowed by the High Court  giving rise to the present appeals.  The High Court has noticed the fact  that  even  though the precise date of  death  of  Ram Shanker  Lal  was not proved, yet the fact that he  was  not seen  or heard of since 1944 was conceded by the  defendant. However, after noticing this fact, the High Court  proceeded to  say  that "Ram Shanker Lal can be presumed to  be  dead. There  can  be no presumption that Ram Shanker  Lal  did  on February 7, 1968, with the result that his heirs and vendors could  transfer  valid  title to  the  petitioner".   It  is difficult to appreciate much less accept this conclusion  of the  High  Court  which has been  treated  as  an  essential condition  to  uphold the validity of the sate made  by  the wife  and  children  of Ram Shanker Lal  in  favour  of  the appellant.   All that was necessary to be seen  was  whether Ram  Shanker Lal was alive on the date of execution  of  the sale  deed in 1968 so that in the absence of his joining  in execution  of the sale deed, the sale deed could be  treated as  ineffective  to  transfer his  share  in  the  ancestral property.   From  the conclusion reached by the  High  Court itself, Ram Shanker Lal had to be presumed to have died much prior to the execution of the sale deed in 1968 since it was conceded  that he was neither seen nor heard of  since  1944

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even  by his wife or his children.  This being so, the  only persons  who  were  required to execute the  sale  deed  for effecting a valid transfer of the property in favour of  the appellant  on  February  8,  1968 when  the  sale  deed  was executed  in the appellant’s favour were the wife,  son  and daughter  of Ram Shanker Lal, who admittedly  have  executed the  sale  deed  in  appellant’s  favour  under  which   the appellant claims title.  There was thus no ground  available in  the second appeal, for the High Court to set  aside  the decree passed in the plaintiff’s favour. 5.Consequently, Civil Appeal No. 1263 of 1976 is  allowed and  the  impugned judgment dated March 19,  1974  by  which Second  Appeal  No.  370 of 1971 was allowed  is  set  aside resulting in restoration of the decree passed in plaintiff’s favour  by the trial court as affirmed in first appeal.   In view of this result, the order of the High Court  dismissing the review petition is ineffective and the Civil Appeal  No. 1264  of  1976 is, therefore, allowed on  this  basis.   The appellant will get the cost throughout from the respondent. 115 INDRAMANI BAI v. ADDL. C.I.T.      ORDER 1. Assessees are the appellants. They areaggrieved    by the judgment of the Andhra Pradesh High Court answering  the question  referred to it under Section 256(1) of the  Income Tax Act, at the instance of the Revenue, against them.   The two questions referred read as follows:               "(1) Whether on the facts and circumstances of               the  case the profits of Rs 41,666 derived  by               the assessee was an adventure in the nature of               trade;               (2)If  the answer to the above question  is               in  affirmative, whether the assessment  could               be  made  in the status of an  association  of               persons." 2.The  assessees are the wives of two brothers,  who  are partners  in  a  firm.   In  December  1963,  the  assessees purchased  a piece of land measuring 8479 sq. yards  in  the Banjara  Hills area of Hyderabad, for a consideration of  Rs 10,620.  They say, they raised the purchase-money by selling their  silver  to  the  partnership  firm,  of  which  their respective  husbands  are  partners.   The  firm  deals   in bullion.  Shortly after purchasing the land, they carved  it into four plots and sold them individually.  Two  agreements of sale were entered into, one in May and the other in  July 1964 and sale deeds executed in pursuance thereof on October 9,  1964  and November 13, 1964.   The  total  consideration received under the sale deeds is Rs 52,285.  The Income  Tax Officer  brought the difference amount to tax  treating  the transaction  as  an adventure in the nature of  trade.   The assessees questioned the same by way of an appeal before the Appellate  Assistant Commissioner.  It was  dismissed.   The matter  was then carried in further appeal to the  Tribunal. The  Tribunal allowed the appeal holding that the  intention of the assessees while purchasing the said land was to  make an  investment and that they had no intention of  re-selling the same.  It observed that having regard to the  background of  the assessees, the transaction cannot be held to  be  an adventure  in  the nature of trade.  On reference  the  High Court came to a contrary conclusion.  According to the  High Court,  the fact that soon after the purchase of  the  land, the  assessees carved it into plots and sold them  within  a few  months, coupled with the other facts and  circumstances of   the  case,  establishes  that  the  intention  of   the assessees, even when they purchased the land, was to  resell

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the  same   and not to make an investment.  It is  the  said conclusion which is questioned before us. 3.On  the facts found, we cannot say that the High  Court was  in  error in coming to the conclusion it did.   On  the other  hand,  the  Tribunal  seems  to  have  made   certain assumptions while coming to the conclusion in favour of  the assessees,  which were not really warranted.   The  Tribunal refers to the 116 ’background  of  the  ladies’ as one  of  the  circumstances inducing  it  to  come to the conclusion in  favour  of  the assessees  but it has not taken care to elucidate what  that background was.  The fact that soon after the purchase,  the assessees  carved  out  the land into plots  and  sold  them within a few months, coupled with other circumstances of the case, is consistent more with the theory of adventure in the nature  of trade than with the other theory accepted by  the Tribunal. 4.We  are,  therefore,  unable  to  see  any  ground  for interference  in this appeal.  It is accordingly  dismissed. There will be no order as to costs. 118