Skip to content


Commissioner of Income-tax Vs. R.B. Jodha Mal Kuthiala and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 26 of 1965
Judge
Reported in[1970]77ITR341(P& H)
ActsIncome Tax Act, 1922 - Sections 26A
AppellantCommissioner of Income-tax
RespondentR.B. Jodha Mal Kuthiala and Co.
Appellant Advocate D.N. Awasthy and; B.S. Gupta, Advs.
Respondent Advocate M.M. Punchhi, Adv.
Cases ReferredMurlidhar Himatsingka v. Commissioner of Income
Excerpt:
- sections 100-a [as inserted by act 22 of 2002], 110 & 104 & letters patent, 1865, clause 10: [dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] letters patent appeal order of single judge of high court passed while deciding matters filed under order 43, rule1 of c.p.c., - held, after introduction of section 110a in the c.p.c., by 2002 amendment act, no letters patent appeal is maintainable against judgment/order/decree passed by a single judge of a high court. a right of appeal, even though a vested one, can be taken away by law. it is pertinent to note that section 100-a introduced by 2002 amendment of the code starts with a non obstante clause. the purpose of such clause is to give the enacting part of an overriding effect in the case of a conflict with laws mentioned with the..........the conclusion of the income-tax officer on the other question. according to him, if there was a genuine partnership it was entitled to registration under section 26a of the act. against the decision of the appellate assistant commissioner, the assessee preferred an appeal to the tribunal. no appeal was preferred by the department. the only question that was mooted before the tribunal was whether the partnership was genuine or not the tribunal came to the conclusion that the partnership was genuine, and, accordingly, in view of the conclusion reached by the appellate assistant commissioner that if the partnership was genuine it was entitled to registration, its registration was ordered under section 26a of the act. the department was dissatisfied with this decision and moved the.....
Judgment:

1. The Income-tax Appellate Tribunal, Delhi Bench 'B', has referred the following question of law for our determination :

'Whether the sub-partnership constituted under the deed of partnership dated the 16th October, 1954, is a valid partnership entitled to registration under Section 26A of the Income-tax Act, 1922 ?'

2. The answer to this question is now furnished by the decision of the Supreme Court in Murlidhar Himatsingka v. Commissioner of Income-tax, [1966] 62 I.T.R. 323 (B.C.).. On facts, the present case is a much stronger case than the one before the Supreme Court. In order to appreciate the applicability of the Supreme Court decision, the following facts may be stated :

The assessment years in question are 1955-56 and 1957-58. R.B. Jodha-mal Kuthiala held 4 as. 6 p. share in Messrs. Hoshiarpur Electric Supply Company (hereinafter referred to as 'the company'). With regard to this share, he constituted a partnership. The partnership consisted of himself, his two major grandsons and two other minor grandsons. The last two were admitted to the benefits of that partnership. In fact, the new partners were sub-partners in the interest held by R. B. Jodhamal in the company. This new firm was duly registered with the Registrar of Assurances and the Registrar of Firms. The sub-partnership filed a return of income showing the income of the company representing the share of R. B. Jodhamal as the share of the partners in the sub-partnership. Along with the return an application was made for registration of the sub-partnership under Section 26A of the Income-tax Act, 1922. The Income-taxOfficer, when the assessment proceedings came belore him, felt that the sub-partnership had been entered into with a view to reduce tax liability, and he rejected the application for registration of the sub-partnership under Section 26A of the Act on two grounds:

(1) that the partnership was sham and not genuine ; and

(2) that the firm was not validly constituted because it carried on no business.

3. On appeal, the Appellate Assistant Commissioner affirmed the conclusion of the Income-tax Officer as to the sub-partnership being not genuine, but he reversed the conclusion of the Income-tax Officer on the other question. According to him, if there was a genuine partnership it was entitled to registration under Section 26A of the Act. Against the decision of the Appellate Assistant Commissioner, the assessee preferred an appeal to the Tribunal. No appeal was preferred by the department. The only question that was mooted before the Tribunal was whether the partnership was genuine or not The Tribunal came to the conclusion that the partnership was genuine, and, accordingly, in view of the conclusion reached by the Appellate Assistant Commissioner that if the partnership was genuine it was entitled to registration, its registration was ordered under Section 26A of the Act. The department was dissatisfied with this decision and moved the Tribunal under Section 66(1) of the Act for a reference of the question of law already set out in the opening part of this opinion. That is how the matter has been placed before us.

4. As already observed, a similar matter came up before the Supreme Court in Murlidhar Himatsingka v. Commissioner of Income-tax and the Supreme Court held that a sub-partnership was entitled to registration under Section 26A, The question whether a partnership is genuine or not is a question of fact and was rightly not referred by the Tribunal. Moreover, no prayer on this behalf was made.

5. The only other matter which has been agitated by Mr. Awasthy is that in fact the sub-partnership is nothing but an alienation of income by R. B. Jodhamal. This contention was not advanced before the Tribunal and it does not also arise out of the order of the Tribunal and, therefore, the learned counsel cannot be permitted to agitate the same in view of Section 66 of the Act.

6. For the reasons recorded above, we answer the question referred in the affirmative, that is, in favour of the assessee. There will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //