SWAMI SATCHITHANAND Vs. ADDITIONAL ITO KOZHIKODE

JUDGEMENT

(1.) THIS is an application for a writ of certiorari quashing Ex. C. 1 order passed by the 1st respondent holding that the business of the Shrishaila Industrial & Spiritual Colony Charities, a society registered under the Societies Registration Act, Act XXI of 1860 (Central), has been discontinued and that under S. 44 of the Indian Income-Tax Act, 1922 (before the amendment of 1938) the petitioners are jointly and severally liable for the tax due from the Society. For the assessment years 1950-51 to 1957-58 the society has been assessed to income-tax, and according to the Revenue the society discontinued business on 201 1957 and the petitioners who were members of the society on the date of the discontinuance of the business are liable for the arrears of the income-tax due for the years referred to above. The question whether the petitioners are liable for the tax for the period in question came up for consideration in O. P. 475/1962 and it was held that they are liable for the tax due from the society for the year 1957-58 only. There was an appeal from that decision and the judgment in the appeal is reported in Income-Tax officer versus Swamy Sachidanand 1964 K. L. T. 612. In that judgement it was held that the entire arrears of tax due from the society for the years 1950-51 to 1957-58 could be recovered from the petitioners if the society has discontinued business. The question whether the society discontinued business and if so, when, was directed to be decided by the Income-Tax Officer. Although the income-Tax Officer has found in Ex. P. 1 order that the society has discontinued business there is no finding in that order when the business was discontinued.

(2.) MR. K. A. Nayar, appearing for the petitioners, contended that the society has not discontinued business and reliance was placed by him upon the statement in Ex. P. 1 order to the effect that the society is in receipt of royalty from the trade mark owned by the society. It was submitted that the receipt of royalty from the trade mark was sufficient to constitute business and therefore the society has not discontinued business. In this connection petitioner's counsel referred me to The Commissioners of Inland revenue v. The Korean Syndicate Ltd. , 12 T. C. 181 and Commr. of E. P. T. versus lakshmi Silk Mills 195120 I. T. R. 451. In the additional counter-affidavit on behalf of the Revenue it is definitely stated on the basis of the letters sent by the trustee of the society that the society has ceased to carry on business from 20 11957, The Income-tax Officer has specifically adverted to this question and has come to the conclusion that "this factor alone will not give the colour that the business is being continued and that the society derives income from any business activity". I do not think that the conclusion is vitiated by an error of law apparent on the face of the record so that I should interfere with the order in a proceeding under Art. 226.

(3.) PETITIONERS' counsel also referred me to the decision in Gopala Menon v. Kalyani Amma 1964 KLT. 166 and submitted that since the society has got a separate personality and is a-right-and-duty-bearing unit, it is a quasi-corporation independent of the members of the society. It was submitted that being a quasi-corporation the debts due from the society or arrears of tax for which the society is liable cannot be recovered from any of the members. So far as this case is concerned it may be stated that a Division bench of this Court has decided in Income-tax Officer v. Swamy Sachidanand 1964 klt. 612 that the petitioners are liable for the tax due from the society for the years 1950-51 to 1957-58. Para. 5 of that judgment runs as follows: "in the light of the contention of the Department that there has been a discontinuance of the business of the society all that is necessary is to affirm the direction in the judgment under appeal that the said question be investigated by the Income-tax Officer and amplify that judgment by saying that if there has been a discontinuance of the business of the society, then the respondents are jointly and severally liable for the payment of the tax in respect of all the assessment years with which we are concerned, namely, 1950-51 to 1957-58. " Petitioner's counsel referred to the decision of Govindan nair J. , reported in Swami Sachidanand v. Second Addl. Income-tax Officer 1964 53 I. T. R. 533 and contended that that learned judge has decided that the members of the society are not liable for the tax due from the society. I do not think, it is open to the petitioners to raise any such contention in view of the finding by the Division Bench that the petitioners would be liable for the arrears of tax due from the society for the years 1950-51 to 1957-58 if there has been a discontinuance of the business. The Division Bench also said: "counsel for the respondents submitted that further questions (1) Is a society like the Shrishaila Industrial and Spiritual colony Charities registered under the Societies Registration Act, 1860, an association of persons not liable to be taxed, under the Indian Income-tax Act, 1922, as contended by the respondents: and (2) Even if such society is liable to be taxed, can the tax liability be impressed on the members of the society so long as the business of the society has not been discontinued and S. 44 of the Indian income-tax Act, 1922, is not attracted? will arise for consideration and that they may be left open for future determination. We do so. "