The main legal point established in the judgment is the characterization of property received from a father as ancestral property based on established legal principles and precedents.

Alfred Henry Lionel Leach, C.J.

1. This is a reference by the Income Tax Appellate Tribunal Calcutta Bench, under Section 66 of the Indian Income Tax Act. The Tribunal has not accurately set out the facts, but these are not in dispute and they may be stated very shortly.

2. The assessee is joint with his three sons. In 1922, he started at Negamba in Ceylon a business in partnership with a stranger to the family. On the 7th May, 1924, he embarked on a cloth business in Colombo. Here he had no partner. In the month of July, 1924, his father gave him a sum of Rs. 25,000 and in the month of June of the following year a sum of Rs. 8, 221. The assessee was one of three brothers and each received the same amount. In the statement of the case it is said that the gift to the assessee in June, 1925, was a sum of Rs. 24,665. This was the amount which was divided by the father between his three sons. Another mistake in the statement of the facts made in the order of reference is that the assessee commenced his business in Colombo after the death of his father. His father died in 1934.

3. On the 26th May, 1938, a deed of partnership was executed by the assessee and his two elder sons who were majors. The third son was a minor but it Was provided that he was to be taken into the partnership on attaining majority. The father and the three sons were each to have a one-third share in the profits.

4. For the years 1939-40 and 1940-1941 the assessee was assessed to Income Tax on the basis that he was the head of a joint Hindu family and that the partnership business belonged to the family. The Income Tax authorities took the view that the money which the assessee had received from his father in 1924 and 1925 constituted ancestral property in his hands and this opinion was accepted by the Appellate Tribunal. The assessee then asked the Tribunal to make this reference. The application was opposed by the Commissioner of Income Tax, but the Tribunal considered that a question of law did arise and has referred four questions. These read as follows:

(a) Whether on the facts and in the circumstances of the case the gifts of money made by Velayudhan Chettiars father must be taken in law as impressed with the character of ancestral property in the hands of Velayudhan Chettiar.

(b) Whether on the facts and in the circumstances of the case the business carried on at Colombo in part with money gifted by Velayudhan Chettiars father was a business of the Hindu undivided family of Velayudhan Chettiar and his sons, the income therefrom being assessable as the income of the undivided family.

(c) Whether there were any materials to justify the finding that part of the capital for the partnership business at Nagambo started in 1922 by Velayudhan Chettiar came from gifts made by Velayudhan Chettiars father and that the Negarrbo partnership was an adjunct or part of the sole Colombo business, the two together forming one business.

(d) Whether the assessment made on the income of the sole business at Colombo and partnership business at Negambo was rightly made on the applicant in the status as a Hindu undivided family or whether the applicant was liable to be assessed only in respect of his share of income under the partnership deed dated 26th May, 1938. The last three questions turn on the answer to be given to the first question.

5. There is ample authority of this Court in support of the decision of the Tribunal that the gift of the Rs. 25,000 in July, 1924, and that of the Rs. 8,221 in June, 1925, constituted ancestral property in the hands of the assessee. In Nagalingam Pillai v. Ramachandra Tevar (1901)11MLJ210 , it was held that where a father gives his self-acquired property to his son he takes it as ancestral property unless it is apparent that he intended the gift to be merely personal to his son. This case was decided by Shephard and Benson, JJ. In delivering the judgment of the Court, Shephard, J., said:

As the father is at liberty to make any disposition h