S C PRASHAR HUNGERFORD INVESTMENT TRUST LIMITED IN LIQUIDATION Vs. VASANTSEN DWARKADAS:VASANTSEN DWARKADAS

JUDGEMENT

(1.) This appeal has been brought to this court on a certificate of fitness granted by the High Court of Bombay. The appellants are the Union of India and the Income-tax Officer, Market Ward, Bombay. By this appeal the appellants challenge the correctness of the judgment and order of the High Court of Bombay dated 5/10/1955, by which the High Court affirmed the judgment and order of a learned single Judge of the same Court dated 7/12/1954 on a petition filed by the respondents under Art. 226 of the Constitution.

(2.) The relevant facts are these. The firm of Purshottam Laxmidas was started on 28/10/1935. This firm had two partners Dwarkadas Vussonji and Parmanand Odhayi. Dwarkadas died on 1/04/1946 leaving a son Vasantsen. Another firm by the name of Vasantsen Dwarkadas was started on 28/01/1941 and in that firm there were three partners, Vasantsen, Narandas Shivji and Nanalal Odhavii. This firm was dissolved on 24/10/1946 The firm of Vasantsen Dwarkadas filed a return of its income for the assessment year 1942-43 and also claimed registration as a firm. The Income- tax authorities refused registration and came to the conclusion that the firm of Vasantsen Dwarkasdas belonged really to Dwarkadas, father of Vasantse, therefore, they added the income of the firm to the income of Dwarkadas. In Subsequent assessment years the firm of Vasantsen Dwarkadas again applied for registration, but registration was again refused. For the assessement years 1942-43 to 1948 -49 several appeals were filed before the Income-tax Appellate Tribunal by the firm Vasantsen Dwarkadas both against the quantum of the Income-tax Officer to register the firm of Vasantesen Dwarkadas. An appeal was also filed by the firm to Purshottam Laxmidas against its assessment in respect of excess profit tax, and there was also an appeal for the assessment year 1942-43 by Vasantsen as the heir and legal representative of his father against the decision of the Income-tax authorities that the income of the firm Vasantsen Dwarkadas should be included in the income of Dwarkadas. It appears that after the decision in Vasantsen's case in the assessment year 1942-43 the Income-tax Officer gave finding that the firm of Vasantsen Dwarkadas was only- a branch of the firm of Purshottam Laxmidas and therefore the Income-tax Officer added the income of Vasantsen Dwarkadas to the income of the firm Purshottam Laxmidas. This question also came up before the Income-tax Appellate Tribunal in the appeal filed by Purshottam Laxmidas in respect of the assessments made against it. By a consolidated order dated 14/08/1951, the Income-tax Appellate Tribunal disposed of all the aforesaid appeals, and it came to the conclusion that the business done in the name of Vasantsen Dwarkadas was really the business of the firm Purshottam Laxmidas. With regard to the appeal filed by Vasantsen as heir and legal representative of his father for the assessement year 1942-43, the Tribunal expressed the view that the income of Vasantsen Dwarkadas should be deleted from the assessment of Dwarkadas. It said.

(3.) The Commissioner of Income-tax questioned the correctness of the aforesaid finding of the Tribunal, but on a reference to the High Court the latter upheld the order of the Tribunal. The reference was decided on 8/10/1953.