Law:

Section:

Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of Indian Income-tax Act, 1922] - Hindu undivided family -Assessee was being assessed in his capacity as karta of the HUF, whose principal source of income was money-lending business - He carried on cloth business under a contract between himself and a Bombay Firm - No part of the family funds was utilized for carrying on said cloth business - Whether accounting entries are not conclusive and fact that assessee came to open his individual capital account to clearly indicated that said account was intended by assessee to take in what he considered to be his separate moneys - Held, yes.- Whether since act of entering any item of money in individual capital account excluded any intention on assessee's part to blend his private moneys with joint family funds, inference drawn by Tribunal was not justified and it could not be held that profit in cloth transaction was profit in hands of HUF of which assessee was karta - Held, yes FACTS The assessee was being assessed in his capacity as karta of the HUF whose principal source of income was money-lending business. He carried on cloth business under a contract between himself and a Bombay firm. No part of the family funds was utilised for carrying on the said cloth business. For conducting business the entire amount was received in one lump by the assessee from the Bombay firm and it was straightaway credited in one lump to the individual capital account in the name of the assessee in the books of account maintained in connection with the family's money-lending business. The revenue authorities as well as the Tribunal held that the income from the cloth business was taxable in the hands of the HUF. On reference : HELD As a matter of law, blending of private properties with those of the family is not a matter of account writing but of the intention of the acquirer. If, the accounting entries are inclusive, then they cannot be accepted as to any extent modifying or qualifying the normal intention which the acquirer may be said to entertain of acquiring for himself. On the other hand, the circumstances in which the assessee came to open his individual capital…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492