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

2. The controversy arose at the time of the assessment of the appellant firm to Excess Profits Tax for three chargeable accounting periods, namely, 14-4-1943 to 13-4-1944, 14-4-1944 to 13-4-1945 and 14-4-1945 toDuring the aforesaid chargeable accounting periods the status of the assessee was that of a firm registered under S. 26-A. Income-tax Act.In the chargeable accounting period ending 13-4-l944 there was no profit in excess of the standard profit but there was a deficiency of Rs. 12,804. The assessee claimed that the total deficiencies amounting to over Rs. 84,000 carried forward from previous years up to the chargeable accounting period ending 13-4-1943 should be added to the sum of Rs. 12,804/- and the aggregate amount should be carried forward under S. 7, Excess Profits Tax Act. The Excess Profits Tax Officer rejected this contention on the ground that there had been a change in the persons carrying on the business and the old business should be deemed to have been discontinued and a new business to have commenced within the meaning of S. 8, Excess Profits Tax Act, and carried over only Rs. 12,804/-.In the chargeable accounting period ending 13-4-1945 there was a profit of Rs. 88,652/- over the standard profit and the Excess Profits Tax Officer allowed only Rs. 12,804/- as the deficiency brought forward and assessed the firm for the nett excess of Rs. 75,848/-. He rejected the contention of the assessee that the deficiency which accrued before 14-3-1943 should also be deducted from the excess Profits of this chargeable accounting period. In the chargeable accounting period ending 31-3-1946 no deduction whatever was allowed on account of the deficiency that was said to have accrued up to the chargeable accounting" period ending 13-4-1943.There were three separate appeals by the assessee to the Appellate Assistant Commissioner against the three orders of the Excess Profits Tax Officer. The Appellate Assistant Commissioner confirmed the assessments and dismissed the appeals. Further appeals were taken to the Income-tax Appellate Tribunal. By an order made on 25-7-1949 the Appellate Tribunal dismissed all the three appeals. Thereupon three applications were made before the Appellate Tribunal under S. 66 (1), Income-tax Act, read with S.Excess Profits Tax Act.The Appellate Tribunal thereupon drew up a statement of case and submitted for the opinion of the High Court the question referred to above. The High Court, in agreement with the Appellate Tribunal, answered the question in the affirmative. Hence the present appeal under a certificate granted by the High Court under S. 66-A (2). Income-tax Act:

Reasoning:
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.