Venkatarama Aiyar, J.
1. The respondent is carrying on business as a Chartered Accountant with his headquarters at Vellore. One of the members of his' regular office establishment is one Raghavachariar who is his own brother. This Raghavachariar is a B. Com. and is entitled to practise ; before the Income-tax Tribunals under Section 61, Income-tax Act;, and he is the person who has generally been attending to the work of the respondent before those Tribunals. He flies the requisite authorisations from the assessees to appear before the Tribunals; signs financial statements for them and he conducts their cases. He is paid a monthly salary by the respondent which starting with Rs. 75 per mensem had been raised from time to time & had stood at Rs. 500 per mensem in 1950. It is also found that the work before the Income-tax Tribunals forms a substantial portion of the business of the respondent. The charge' of the Disciplinary Committee against the respondent is that while he receives the full fees from the assessees for the work before the Tribunals, he actually entrusts that work generally to Raghavachariar, pays him monthly salary as aforesaid and takes the balance of fees for himself. This, it is said, is a violation of the rule of conduct laid down in Clause (c) of the schedule to the Act.
2. On 9-9-1948 Raghavachariar was taken by the respondent as an articled clerk and he continued thereafter, as before, to conduct cases before the Income-tax Tribunals & draw monthly salary from the respondent. The charge against the respondent on this score is that he acted in contravention of Rule 44, Auditor's Certificate Rules, 1932 & Regn. 38 under Act 38 of 1949 in permitting the articled clerk to engage in business without obtaining the requisite sanction. These are the two charges framed against the respondent and the Disciplinary Committee has held in its report that both these charges have been made out; and that the respondent is, therefore, not a person fit to continue to be a member of the Institute. The matter comes before us on reference on this report under Section 21, Chartered Accountants Act, 1949.
3. We have carefully considered the matter and we have come to the conclusion that neither of the two charges is established. On the first charge the Disciplinary Committee holds that on the facts which are not in dispute the action of the respondent falls within Clause (c) of the schedule to the Act which runs as follows:
'A chartered accountant shall be deemed to be guilty of conduct rendering him unfit to be amember of the Institute if he--
(c),accepts or agrees to accept any part of the profits of the professional work of a lawyer, auctioneer, broker or other agent who is not a member of the Institute.'
Mr. R.. Ramamurthi Aiyar the learned advocate who appeared for the Council referred us to Clauses (b) and (c) in the schedule and argued that they embody the principle that a: Chartered Accountant should not in any manner share the income with one who is not a Chartered Accountant and that the arrangement between the respondent and Raghavachariar ,was a violation of this principle. But the true purpose of those provisions is to prohibit the practice of Chartered Accountants paying commission in any form for work which they get from others and receiving commission for work which they send on to other persons such as lawyers, auctioneers and brokers. It is difficult to see how on the facts of this case it can be said that the respondent has acted in contravention of Clause (c). Before that clause can be applied it should be established that Raghavachariar earned fees as a lawyer and the respondent accepted or agreed to accept a portion, thereof. Now the facts are that the assessees are the clients of the respondent & not of Raghavachariar. It is the respondent that deals with the assessees, settles the fees with them, receives the same from them & brings them into account & treats them as his own. He, no doubt, entrusts the conduct of the cases generally to his brother but he continues to be answerable to the clients. In fact and in law Raghavachariar did not earn any fees from the assessees and the respondent entered into no arrangement with him for payment by him of any portion of those fees.
4. It is said that the authorisations to appear for the assessees before the Income-tax Tribunals were signed by Raghavachariar and not by the respondent. But that was for the purpose of conforming to the requirements of Section 61, Income-tax Act and is a matter of form. It may be added that even on these authorisations Raghavachariar described himself as 'Income-tax Practitioner and Assistant of Sri K.V. Narasimham, M.A., G.D.A.F.C.A, Chartered Accountant.' The real question is whether the assessees are the clients of the respondent of Raghavachariar. It is impossible on the facts stated above to come to any other conclusion than that they were the clients of the respondent; and that Raghavachariar was only an employee looking to the respondent for the payment of his salary and not a lawyer looking to the assessees for the payment of his fees.
5. Mr. Ramamurthi Iyer argued that the financial statements before the Tribunals are filed by Raghavachariar as income-tax practitioner, that if they are found to violate the principles laid down in the schedule the Council would have no direct control over him and that if Chartered accountants are allowed to carry on business before the Income-tax Tribunals through practitioners over whom the Council has no control they would be in a position to evade the wholesome restrictions imposed upon them by the Statute but this fear appears to us to be unfounded. The respondent admits that the assessees are his clients and that Raghavachariar acts and appears only for him in the proceedings before the Income-tax Tribunals and he will, therefore be responsible in the same manner as a principal for the acts of his agent. We are, therefore, of opinion, that this charge cannot be sustained.
6. The second charge against the respondent is that after taking Raghavachariar as an articled clerk on 9-9-1948 he allowed him to appear before the Income-tax Tribunals, file authorisations and financial statements and conduct cases as before, that he thus allowed the articled clerk to carry on business and as no permission had been obtained therefor it was a violation of Rule 44, Auditor's Certificate Rules, 1932 and Regn. 38 under Act 38 of 1949. Rule 44 is as follows:
'No articled clerk shall, during the time of his service as articled clerk except with the permission of the Central Government, engage in any other business or occupation.'
Regulation 38 is in these terms:
'No articled clerk shall, during the period of his service as articled clerk, except with the permission of the Council engage in any other business or occupation.'
We think that neither the rule nor the regulation aforesaid has any application to the present case because the business in which Raghavachariar was engaged was part of the business of the respondent and falls within the region of his duties as an articled clerk. The rules only prohibit engaging in 'any other business or occupation.' that is a business other than that in respect of which he is an articled clerk. The work of the respondent as an auditor includes the work before the Income-tax Tribunals and it was, therefore, business which was within the scope of the duties of Raghavachariar as an articled clerk. The fact that Raghavachariar received remuneration for it in the form of monthly salary does not affect the question.
7. We accordingly hold that this charge also isnot made out. The order on this reference will,therefore, be that the respondent is not guilty ofany act which renders him unfit to be a memberof the institute. There will be no order as tocosts.