V PL FIRM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner is a registered firm which seeks a direction to the respondent to exercise his powers under section 66(7) of Income-tax Act, 1922, and allow interest on a sum of Rs. 51,137.03 due as refund. THE firm was, for the assessment year 1951-52, assessed to income-tax under section 23(3), its prayer for refund as a registered firm having been rejected. On the question status, the petitioner eventually succeeded on a reference to this court under section 66(2). Pursuant to the opinion expressed by this court in the reference, the Tribunal, by its order dated October 19, 1961, directed the Income-tax Officer to grant registration to the firm under section 26A for the year 1951-52. THE Income-tax Officer carried out the direction by an order of his dated February 2, 1962. THEreafter, the same officer worked out the tax effect on the individual assessment of each of the partners and a s sum of Rs. 51,137.03 was adjusted by him against the tax due from them. As a result of the disposal by the Tribunal of the firms appeal, a refund of Rs. 27,739.39 had been made earlier on July 16, 1960. After deducting these two amounts from Rs. 90,168.69 which was the amount paid by the firm a refund of Rs.11,298.27 was made. This is how the Income-tax Officer worked out : <FRM>JUDGEMENT_22_ITR71_1969Html1.htm</FRM>

(2.) THE refund of Rs. 11,298.27 already made by the Income-tax Officer, a we think, really proceeded or should have proceeded on that basis, for otherwise it could not be justified. In the excerpt from the Income-tax Officers computation given above, the Income-tax Officer has stated that the refund was due to the registered firm in the sum of Rs. 51,137.03, and that it was adjusted against the tax due from the firm. But the adjustment was towards tax liability of each of the partners assessed individually on his total income inclusive of his share of profits.