JOSE T MOOKKEN Vs. COMMISSIONER OF INCOMETAX ERNAKULAM

JUDGEMENT

(1.) ONE Sri M. O. Thomakutty was carrying on business as sole proprietor in the name and style of Mookken Devassy Ouseph and Sons during the accounting years relevant to the assessment years 1950-31 and 1951-52. During that time he was working a salt factory taken on lease from the Government of Cochin. For these assessment years Sri Thomakutty claimed as revenue expenditure amounts of Rs. 51,499.76 and Rs. 60,000 respectively These amounts were said to have been expended for the maintenance etc. of the salt factory concerned. The Income Tax Officer disallowed these claims for deduction-The disallowance was based on certain information received from the State Government which, it would appear, had not been properly disclosed to the assessee The matter ultimately came up in reference before this court. By judgment dated 12th June 1958 this court held the assessments to be invalid. In the mean-while Thomakutty had paid the tax due as per the assessments for these two years. Consequently on the order of this court the tax so paid became refundable. On a petition by the assessee the Commissioner of Income Tax granted the refund and also passed an order under S.66(7) of the Income Tax Act, 1922 sanctioning payment of simple interest at 4 percent per annum on the amount of refund from the date of payment till date of repayment. The amounts so paid as intesest during the accounting year ended 31st March 1960 came to Rs. 12,353.

(2.) BEFORE this refund had been received Sri Thomakutty had converted his proprietary business into a partnership with his three sons to carry on the business in the same name and style of Mookken Devassy Ouseph and Sons. Clause.4 of the Partnership deed which is dated 1st April 1957 is as follows: "Amounts that may have to be paid and the obligations that may have to be answered on account of income tax, sales tax or otherwise in respect of the business of number I shall be be borne and discharged and refunds taken and enjoyed by the partners herein in proportion to the shares held by them in this partnership."

(3.) AN application for reference was filed by Sri Jose T. Mookken before the Tribunal. According to him the following questions of law arise out of the order of the Appellate Tribunal, and these questions had to to referred to the High Court under S.256 (1) of the Income Tax Act, 1951. The questions pointed out by the applicant were: