COMMISSIONER OF INCOME TAX Vs. L ALAGAPPAN

JUDGEMENT

(1.) THE questions referred to us in this case are in some way linked to the questions referred to us in T. C. Nos. 516 to 520 of 1998 (see [2001] 251 ITR 758). THE facts required to be considered in this case are more or less similar to the facts considered in those cases. THE assessment year is 1970-71.

(2.) THE assessee had a licence to carry on business as insurance agent and had earned commission, by carrying on the business, but had claimed that he was not to be taxed on that income, as he had entered into an agreement with firm which comprised his wife and mother as partners of which he claimed to be the general manager, under which he was to make over to the firm his income from the insurance agency. Under Section 42, Sub-sections (7) and (8) of the Insurance Act, 1938, it is an offence for a person to carry on business as an insurance agent without a licence. THE firm with which he had entered into the agreement admittedly did not have the licence, and could not have carried on insurance business. It is obvious that the device adopted by the assessee was only to reduce his tax burden by purporting to show his income as the income of the registered firm.