Law:

Section:

Section 4 of the Income-tax Act, 1961 - Individual - Assessable as - 'B' karta of assessee-HUF along with his father 'A' and two brothers, was joint owner of two concerns - They formed a firm by taking in a stranger as partner, in name of 'BB' to carry on business of said two concerns - Later, a company in which 'B', his father and his brothers held shares, purchased assets of those two concerns, and appointed 'BB' as its managing agents - Subsequently, on 'B' becoming sole proprietor of 'BB', a fresh agreement was executed between parties appointing BB as managing agents of company under articles of association of company - Holding of any shares in said company was not a qualification for appointment of managing agents and investment of HUF of 'A' and his sons in limited company was quite insignificant - There was no material to hold that appointment of 'BB' as managing agents was part of scheme under which limited company purchased said two running concerns of HUF of A and his sons and that partners of 'BB' represented their families in partnership business - 'B' was assessed in status of an individual throughout up to and including assessment year 1958-59 in respect of his entire income including share income from firm of period during when this firm consisted of four partners and also during period when he was sole proprietor of managing agency business - During relevant assessment year revenue sought to assess managing agency remuneration of 'BB' as income of assessee-HUF of which 'B' was karta - Whether firm 'BB' was independent of two concerns because one of its partners was a stranger, and, therefore, on facts on record, said firm could not be said to be an asset of HUF of A and his sons - Held, yes - Whether, since no connection had been established between investment made by HUF in company and appointment of 'BB' as its managing agents remuneration received by managing agency during relevant period was individual income of 'B' and not income of assessee-HUF of which he was karta - Held, yes FACTS For the assessment year 1959-60, 'B' was the sole proprietor of a managing agency business, named 'BB'. Earlier, 'B', the karta of the assessee-HUF was the…

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