Case: Kshetra Mohan-Sannyasicharan Sadhukhan Vs. Commissioner Of Excess Profits Tax,West Bangal

prevent the individual members of one Hindu undivided family from entering into a partnership with the individual members of another Hindu undivided family and in such a case it is a partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two Hindu undivided families.We need not pursue this matter further, for in the case now before us there is no evidence whatever to prove that all the members of the two families had individually become partners in the business at any time before 14-4-1943. The documents to which reference will presently be made do not support the case now sought to be made by learned counsel for the assessee.7. Section 26-A permits an application to be made to the Income-tax Officer on behalf of any firm constituted under an instrument of partnership specifying the individual shares of the partners for registration for the purposes of the Indian Income-tax Act. Sub-section (2) of that section provides that the application shall be made by such person or persons and shall be in such form and be verified in such manner as may be prescribed. Rule 2, Income-tax Rules, requires that such application shall be signed by all the partners personally. Rule 3 enjoins that the application shall be made in the form annexed to that rule.It appears that on 19-l0-1943 an application was made on behalf of Kshetra Mohan Sadhukhan and sons and Bijan Kumar Sadukhan and brothers for the renewal of the registration of the firm under S. 26-A, Income-tax Act for the assessment for the Income-tax year 1942-43. It was alleged in that application that the constitution of the firm and the individual shares of the partners as specified in the instrument of partnership remained unaltered. In the schedule to the application were set out the required particulars. The last column showed that in the balance of profits or loss the share of Kshetra Mohan Sadhukhan and sons was Rs. 4,370 and that of Bijan Kumar Sadhukhan and brothers was also Rs. 4,370/.The instrument of partnership dated 19-9-1943 referred to in the application appears to be one made between Gosta Behari Sadhukhan and Bros. called the first party and Bijan Kumar Sadhukhan and Bros. called the second party Clause 6 of that deed provided that the profits of the partnership should belong to "the partners equally, i.e., eight-annas share each". Clause 7 of the deed referred to "either partner" and clause 8 to "either of the partners". These expressions clearly indicate that the partners were two only and an equal share of eight annas also indicates the same.It further appears that on 28-12-1944 another deed of partnership was drawn up. In this deed there are eight parties. Learned counsel for the appellant relies on the first four recitals as clearly indicating that even before 13-4-1943 the eight individual members of the two families carried on business in partnership. This construction of those clauses is clearly inconsistent with the fifth recital which says that on and from the 1st Baisak 1350 B. S, i.e. 14-4-1943 the said firm was reconstituted as constituted of eight partners. If the firm was before 1st Baisak 1350 B. S. constituted of eight partners then there could be no occasion for reciting that "the firm was reconstituted as constituted of eight partners".Further, the statement of case drawn up by the Appellate Tribunal, which is binding on the assessee, clearly indicates that up to 13-4-1943 the business was a partnership concern carried on by two Dayabhaga Hindu undivided famlies and that it was after that date that the eight members of the two families constituted themselves into a partnership. The returns in the firms files up to 1943-44 also show only two partners Kshetra Mohan Sadhukhan and sons and Sannyasi Charan Sadhukhan and sons-each having an eight-annas share. It is from 1944-45 that eight partners are being shown. As already stated, the application dated 19-10-1943 also indicates that the parties themselves considered that the business was carried on by two partners.Further, the very question referred by the Appellate Tribunal implies, as pointed out by the High Court, that a business was carried on by a partnership composed of two partners each of which was a Hindu undivided family, that there was a disruption of both the families and that on and after such disruption the business was carried on by a partnership entered into by and between the separated male members of the two families.We also agree with the High Court that if the case of the assessee was that even before 14-4-43 there was a partnership of eight persons and if that case was accepted by the Appellate Tribunal then no question of law could have arisen on those facts, it is only because the fact found was that prior to 13-4-1943 the business was carried on by a partnership of two Hindu undivided families which prima facie means a partnership between two Kartas representing two Hindu undivided families and that from 14-4-1943 it became a business of eight individual members of two disrupted families that the question of law could arise. If, as we hold, the assessee is not entitled to go behind the facts so found by the Appellate Tribunal in the statement of the case and as is implicit in the question itself, then there can be no doubt that there had been a change in the persons carrying on the business within the meaning of S. 8, Excess profits Tax Act and it has not been argued otherwise. In our opinion. therefore, the answer given by the High Court to the referred question was correct.8. In this view of the matter it is not necessary to consider whether the fact of Nandodulal, the youngest son of Sannyasi Charan, being a minor before 13-4-1943 and of his attaining majority on I8-7-1943, as stated by the learned counsel for the assessee, will bring the case within the meaning of S. 8, Excess Profits Tax Act.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]A Hindu undivided family is no doubt included in the expression "person" as defined in the Indian Income-tax Act as well as in the Excess Profits Tax Act but it is not a juristic person for all purposes. The affairs of the Hindu undivided family are looked after and managed by its Karta. When two Kartas of two Hindu undivided families enter into it partnership agreement the partnership is popularly described as one between the two Hindu undivided families but in the eye of the law it is a partnership between the two Kartas and the other members of the families do not ipso facto become partners. There is, however, nothing to prevent the individual members of one Hindu undivided family from entering into a partnership with the individual members of another Hindu undivided family and in such a case it is a partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two Hindu undivided families.We need not pursue this matter further, for in the case now before us there is no evidence whatever to prove that all the members of the two families had individually become partners in the business at any time before 14-4-1943. The documents to which reference will presently be made do not support the case now sought to be made by learned counsel for thealso agree with the High Court that if the case of the assessee was that even before 14-4-43 there was a partnership of eight persons and if that case was accepted by the Appellate Tribunal then no question of law could have arisen on those facts, it is only because the fact found was that prior to 13-4-1943 the business was carried on by a partnership of two Hindu undivided families which prima facie means a partnership between two Kartas representing two Hindu undivided families and that from 14-4-1943 it became a business of eight individual members of two disrupted families that the question of law could arise. If, as we hold, the assessee is not entitled to go behind the facts so found by the Appellate Tribunal in the statement of the case and as is implicit in the question itself, then there can be no doubt that there had been a change in the persons carrying on the business within the meaning of S. 8, Excess profits Tax Act and it has not been argued otherwise. In our opinion. therefore, the answer given by the High Court to the referred question was correct.In this view of the matter it is not necessary to consider whether the fact of Nandodulal, the youngest son of Sannyasi Charan, being a minor before 13-4-1943 and of his attaining majority on I8-7-1943, as stated by the learned counsel for the assessee, will bring the case within the meaning of S. 8, Excess Profits Tax Act.