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Uting his separate property can enter into a valid partnership with the karta of his fami- ly, as held by the Privy Council in Lachhman- das' case, there seems no valid reason why a coparcener cannot, by contributing merely his skill and labour, enter into a partnership with the karta. If the former does not cut at the root of the notion of the joint Hindu family, the latter also does not. Even in the case of the former, the partnership property will consist of the contribution made by the karta from the coparcenary property and the contribution made by the coparcener of his individual property- Both taken together would become partnership property in which all the partners would have interest in proportion to their share in the joint venture of the busi- ness of partnership (Narayanappa v. Bhaskara Knshnappa, AIR 1966 SC 1300, 1304 (para 5). If in such a situation the coparcener entering into the partnership can be a partner in relation to coparcenary property contributed for the partnership business, there can be no difficulty in holding that the same result would follow when the coparcener entering into a partnership only contributes his skill and labour. In the former case, as stated by the Privy Council in Lachhmandas' case [1948] (16) ITR 35, the coparcener entering into the partnership, retains his share and interest in the family property while simultaneously enjoying the benefit of his separate property and the fruits of its investment. In the same way, it can be said that in the latter case the coparcener retains his share and interest in the property of the family while simultane- ously enjoying the benefits of his skill and labour which he contributes as consideration for formation of the partnership and for sharing profits.

Learned standing counsel for the department further sub-

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mitted that as the profits earned by a part- nership in which the contribution of capital is only of joint family funds from the side of the karta would ensure to the benefit of the entire joint family being earned with the help of the joint family funds, a coparcener who only contributes his skill and labour for becoming a partner cannot claim any share in the profits as his separate property and, therefore, there cannot be any valid partner- ship. Learned counsel in this connection relied upon the case of V..D. Dhanwatey v. CIT [1968] (68) ITR 365 (SC). Dhanwatey's case has to be read along with the case of CIT v. D.C. Shah [1969] (73) ITR 692 (SC). In Dhanwatey's case [19681 (68) ITR 365 (SC) a karta of a HUF who entered into a partnership was paid a salary from the partnership and it was held that the salary income was the income of the HUF..The basis of the decision was that the salary was paid because of the investments of the assets of the family in the partnership business and there was a real and sufficient connection between the investments from the joint family funds and the remuneration paid to the karta. In Shah's case [1969] (73) ITR 692 (SC) also the karta entered into a part- nership and was paid remuneration. But as the remuneration was paid for the specific acts of management done by the karta resting on his personal qualification and not because he represented. the HUF, it was held that the remuneration was his individual income. Apply- ing the same principle, if a coparcener be- comes a working partner in a partnership with the karta and gets a share in profits in consideration of the skill and labour contrib- uted by him, his share in the profits would be his separate property for the profits coming to his share would be directly related to his skill and labour and not to be investments of the joint family funds in the business. The question, however, whether a coparcener enter- ing into a partnership with the karta does really contribute any labour or skill for the management of the partnership business in which he is given a share in profits is a question of fact which will have to be deter- mined in the light of the circumstances of each case. In case it is found that there is no real contribution of skill or labour by the coparcener for sharing the profits, the part- nership will be held to be unreal and ficti- tious but that is an entirely different thing from saying that there cannot at all be a valid partnership between the karta and a coparcener when the latter only con-

This takes us on to the second point made by Sri Man- chanda that, though an undivided member can, by contributing separate capital, enter into a partnership with the karta qua the family business, he cannot do so by offering as his contribution to the firm not material capital but only his labour and skill. With regard to this submission made by the learned counsel for the respondent that skill and labour cannot be equated with property, it may not be out of place to refer to some earlier history. As has been stated in Mulla's Hindu Law, before the commencement of the Hindu Gains of Learning Act, 1930 (hereinafter referred to as the Act) it was settled law that income earned by a member of a joint family by the practice of a profession or occupation requiring special training was joint family property if such training was imparted at the expense of joint family proper- ty. This being so, if such a member of a joint family were to enter into a partnership with the karta of the family to carry on business, the fruits even of his skill and labour would have been property of the joint family and the very purpose of entering into a partnership namely having a share of his own in the profits of the business would have been defeated. In this state of law if an agreement was reached between such member of the joint family and the karta that out of the profits of the business a defined share will be payable to and be the separate property of such member, the agreement would have been illegal. Indeed such a member would have been getting a separate share in the profits of the business without making any contribution of his own.

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As seen above, the definition of the term "learning" is very wide and almost encompasses within its sweep every acquired capacity which enables the acquirer of the capacity "to pursue any trade, industry, profession or avocation in life." The dictionary meaning of "skill", inter alia, is:

"the familiar knowledge of any science, art, or handicraft, as shown by dexterity in execution or performance; technical ability" and the meaning of "labour" inter alia is: "physi- cal or mental exertion, particularly for some useful or desired end." Whether or not skill and labour would squarely fall within the traditional jurisprudential connotation of property e.g. jura in re propria, jura in re aliena, corpo- real and incorporeal etc. may be a moot point but it cannot be denied that skill and labour involve as well as generate mental and physical capacity. This capacity is in its very nature an individual achievement and normally varies from individual to individual. It is by utilisation of this capacity that an object or goal is achieved by the person possessing the capacity. Achievement of an object or goal is a benefit. This benefit accrues in favour of the individual possessing and utilising the capacity. Such individual may, for consideration, utilise the capacity possessed by him even for the benefit of some other individual. The nature of consideration will depend on the nature of the contract between the two individuals. As is well known, the aim of business is earning of profit. When an individual contrib- utes cash asset to become partner of a partnership firm in consideration of a share in the profits of the firm, such contribution helps and at any rate is calculated to help the achievement of the purpose of the firm namely to earn prof- it. The same purpose is, undoubtedly, achieved also when an individual in place of cash asset contributes his skill and labour in consideration of a share in the profits of the firm. Just like a cash asset, the mental and physical capac- ity generated by the skill and labour of an individual is possessed by or is a possession of such individual. Indeed, skill and labour are by themselves possessions. "Any posses- sion" is one of the dictionary meanings of the word 'proper- ty'. In its wider connotation, therefore, the mental and physical capacity generated by skill and labour of an indi- vidual and indeed the skill and labour by themselves would be the property of the individual possessing them. They are certainly assets of that individual and there seems to be no reason why they cannot be contributed as a consideration for earning profit in the business of a partnership firm. They certainly are not the properties of the HUF but are the separate properties of the individual concerned. To hold to the contrary, we may observe, would also be incompatible with the practical, economic and social reali- ties of present day living. We no longer live in an age when every member of a HUF considered it his duty to place his personal skill and labour at the services of the family with no quid pro quo except the right to share ultimately, on a partition, in its general prosperity. Today, where an undi- vided member of a family qualifies in technical fields - may be at the expense of the family - he is free to employ his technical expertise else- where and the earnings will be his absolute property; he will, therefore, not agree to utilise them in the family business, unless the latter is agreeable to remunerate him therefor immediately in the form of a salary or share of profits. Suppose a family is running a business in the manufacture of cloth and one of its members becomes a tex- tile expert, there is nothing wrong in the family remunerat- ing him by a share of profits for his expert services over and above his general share in the family properties. Like- wise, a HUF may start running a diagnostic laboratory or a nursing home banking on the services of its undivided mem- bers who may have qualified as nurses and doctors and prom- ising them a share of profits of the 'business' by way of remuneration. This will, of course, have to be the subject matter of an agreement between them but, where there is such an agreement, it cannot be characterised as invalid. It is certainly illogical to hold that an undivided member of the family can qualify for a share of profits in the family business by offering moneys - either his own or those de- rived by way of partition from the family - but not when he offers to be a working partner contributing labour and services or much more valuable expertise, skill and knowl- edge for making the family business more prosperous. For the reasons discussed above, we have reached the conclusion that the decisions referred to above which sup- port the contentions of learned counsel for the appellants lay down the correct legal position. The two decisions relied on by the learned counsel for the respondent in the cases of Pitamberdas Bhikhabhai and Co. and Shah Prabhudas Gulabchand of the Gujarat and Bombay High Courts respective- ly turned on their particular facts and, if read as laying down a contrary rule, do not lay down good law. In this view of the matter, it cannot be said that when a coparcener enters into a partnership with the karta of a HUF and con- tributes only his skill and labour, no contribution of any separate asset belonging to such parruer is made to meet the requirement of a valid partnership. Reverting to the facts of the instant case it is noteworthy that it is not the case of the Revenue that the partnership between Chandrakant Manilal Shah as karta of HUF and Naresh Chandrakant was fictitious or invalid on any other ground. Consequently, the judgment of the High Court cannot be sustained. In view of the foregoing discussion, this appeal suc- ceeds and is allowed. The judgment of the High Court is set aside and the question referred to the High Court is an- swered in the affirmative, in favour of the assessee and against the Revenue. In the circumstances of the case, however, there shall be no order as to costs.