VINODKUMAR RATILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference made at the instance of the assessee the following question has been referred to us :

(2.) THE assessee in this case, Ratilal Ranchhoddas, died on July 1, 1963, and in the income -tax proceedings the assessee's estate has been represented by the hair and legal representative of the deceased, Ratilal Ranchhoddas. The relevant assessment year is 1964 -65. The deceased assessee was a partner in a two firms : (1) Messrs. Ranchhoddas Bhaichand and Co. and (2) Messers. Ranchhoddas Bhaichand (Grain Dept.) and both these firms were being assessed at Bombay. The previous year for the two firms relevant for the assessment year 1964 -65 was the Samvat Years 2019 (October 29, 1962, to October 17, 1963). In both these firms the assessee's wife, Lilavati, was also partner in two minor sons of the assessee, Kirankumar and Sanjaykumar, were admitted to the benefits of the partnership. The assessee died on July 1, 1963, that is, more than three months before the end of the relevant previous year which ended on October, 17, 1963. Both these partnership firm were constituted under instruments of the partnership both dated November 26, 1959. The partner included the assessee and his wife, where has the three minor sons of assessee, namely, Vinodkumar, Kirankumar and Sanjaykumar, were admitted the benefit the benefit of the partnership. The business of the partnerships was to be closed at the end of every Hindu year, that is, also Vad 30, and the profits of the allocated on Also Vad 30 as per the profits sharing ratio maintained therein. It appears that Vinodkumar, the eldest sons of the deceased, become a major in 1962, and January 22, 1962 two supplemental deed of partnership were executed to recognize the fact that Vinodkumar has ceased to be a minor and had opted for being taken up as a partner and the shares of the partners were adjusted by the supplemental deeds of the partnership of January 22, 1962. The deceased -assessee expired on July 1, 1963, and after his death on September 28, 1963, new partnership deeds were executed bring in to existence two partnership firm with effect from July, 2, 1963. The partnerships which were constituted after the death of the deceased were to continue their business under the same name as before the date of death of the deceased and it was also recorded in the new deeds of the partnership that Lilavati, the widow of the deceased, had expressed a desire to retire from the partnership.

(3.) IN order to appreciate the contention urged at the Bar and also in order to understand the several authorities which have been relied upon on the course of the Indian Income -tax Act, 1922. Prior to 1937, there was no provisions similar to section 64 of the Income -tax Act, 1961. By the Indian Income -tax (Amendment) Act, 1937 (Act 4 of 1937) section 16 (3) was inserted in the Act of 1922 and under that section in computing the total income of any individual for the purpose of assessment, there shall be included, -