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Universal Commercial Company Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 35 of 1975
Judge
Reported in[1981]130ITR775(Mad)
ActsIncome Tax Act, 1961 - Sections 148 and 256(1)
AppellantUniversal Commercial Company
RespondentCommissioner of Income-tax
Appellant AdvocateS.V. Subramaniam, Adv.
Respondent AdvocateA.N. Rangaswami and ;Nalini Chidambaram, Advs.
Excerpt:
- .....whether, by reason of an assessment having been made on smt. manibai, an erstwhile partner of the assessee-firm, including her share income from the assessee-firm for the assessment year 1965-66, no assessment could be made on the assessee-firm as an unregistered firm for that assessment year '2. the assessee was a firm of two partners, namely, smt. suvarna b. acharya and smt. manibai, constituted under a deed dated december 9, 1964. the assessee filed an application claiming registration for the assessment year 1965-66, on december 29, 1964. the business of the firm was closed on june 30, 1965. one of the partners, smt. manibai, left for hyderabad in july, 1965, and set up business there. the other partner left for bangalore. since the assessee had not filed any return, the ito closed.....
Judgment:

Sethuraman, J.

1. In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred :

' Whether, by reason of an assessment having been made on Smt. Manibai, an erstwhile partner of the assessee-firm, including her share income from the assessee-firm for the assessment year 1965-66, no assessment could be made on the assessee-firm as an unregistered firm for that assessment year '

2. The assessee was a firm of two partners, namely, Smt. Suvarna B. Acharya and Smt. Manibai, constituted under a deed dated December 9, 1964. The assessee filed an application claiming registration for the assessment year 1965-66, on December 29, 1964. The business of the firm was closed on June 30, 1965. One of the partners, Smt. Manibai, left for Hyderabad in July, 1965, and set up business there. The other partner left for Bangalore. Since the assessee had not filed any return, the ITO closed the file relating to its registration and he issued a notice under Section 148 of the Act calling upon the assessee to file a return of its income for the said year. There was no response. The ITO, by his order dated July 28, 1971, determined the income on the basis of the figures available to him and assessed the assessee in the status of an ' association of persons '. He refused registration to the firm on the application filed earlier. The assessee appealed and the AAC held that the status adopted, namely, ' association of the persons ' was correct. He, however, gave some reduction in the quantum of assessment. There was an appeal to the Tribunal by the assessee and the Tribunal held that since the ITO, Hyderabad, had assessed Manibai, one of the partners, on her income from the firm, there was no jurisdiction to assess the assessee. The result was that the assessment made on the assessee in the status of ' association of persons ' was cancelled. This order of the Tribunal has given rise to the present reference.

3. We have considered an identical question in CIT v. Blue Mountain Engineering Corporation : [1978]112ITR839(Mad) . We have held therein that with reference to the provisions of the 1961 Act, the assessment made on the firm as an unregistered firm, after the assessment made earlier in the case of one of the partners, was not legal. Though, in the present case, the status taken is ' association of persons ', there is nothing in principle which would differentiate it from the principle enunciated in the said decision. The reference is, accordingly, answered in the affirmative in the sense that no assessment could be made on the assessee-firm after the assessment on Manibai. There will be no order as to costs.


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