A GRAHAM Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE petitioner was a partnership firm. THE partners of the firm were one A. Greha Durai and his three brothers, who were the sons of one P. Iya Nadar. THE partnership was evidenced by a partnership deed dated March 21, 1960. For the assessment years 1960-61 and 1961-62, the partnership firm applied for registration under the Agricultural Income-tax Act, 1955, and the same was granted. But, for the assessment year 1962-63, which is the year now in dispute, the firm did not apply for registration. But the partnership was continued. On April 1, 1963, the partnership was dissolved. For the assessment year 1962-63, the four partners submitted four separte applications for composition of agricultural income-tax. Since the partnership was in existence during the assessment year, they were asked to submit a single composition application for all the lands. THE assessee-firm replied on May 4, 1962, stating that the partners were not making their applications in their capacity as partners of a firm but they were submitting as 'Individual members. But the Agricultural Income-tax Officer refused to permit the composition by individual members, as the partnership continued and was in existence throughout the assessment year. THE Agricultural Income-tax Officer, therefore, directed them to submit their return of income for the assessment year 1962-63.

(2.) THE assessee then submitted a return of the income but claimed the status of the individuals as "tenants-in-common" and required to be assessed under section 3(3) of the Agricultural Income-tax Act. THE Agricultural Income-tax Officer held that since the partnership was entered into for the specific purpose of earning agricultural income and the firm was dissolved only as and from April 1, 1963, subsequent to the assessment year, the assessee was liable to be assessed as an unregistered firm and assessed it accordingly. THE Assistant Commissioner of Agricultural Income-tax and the Tribunal confirmed the order In this revision, the learned counsel for the petitioner-firm raised the same contention and argued that the four partners were tenants-in-common during the assessment year 1962-63, and that, therefore, they are to be assessed only as provided under section 3(3) of the Act. It is seen from the partnership deed dated March 21, 1960, and the order of the Tribunal that the four brothers entered into a partnership called "A. Graham and Brothers" for cultivating their agricultural lands as a partnership firm and during the accounting period in question the partnership was unregistered under the Agricultural Income-tax Act but cultivated the lands and derived the income. Prior to the partnership the partners were divided brothers owning definite portions of lands.THE partnership was entered into for joint management of the entire lands with a view to ensure efficiency, economy and convenience and with a view to expand and improve agricultural production and carry on and continue the agricultural business in partnership among themselves on the terms and conditions set out in the deed. Under clause 1, the parties shall manage the business pertaining to the agricultural lands held by them jointly and individually under the name and style of "A, Graham and Brothers". THE capital of the partnership shall be a sum of Rs. 20, 000 and to be contributed equally by the four partners. Under clauses 4 and 5, the profits and losses of the agricultural business shall be divided among the partners in equal proportion the bank account shall be operated by one of the partners and the bank account is to be opened in the name of the partnership.