NIHORI LAL PRABHUDAYAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A family consisting of a father and his six sons was assessed as a Hindu undivided family. The family carried on money-lending business in the name and style of Nihori Lal Prabhu Dayal and cloth business in the name of Nihori Lal Hiralal. The accounting period relevant to the assessment year 1946-47 for the money-lending business was from 27th September, 1944, to 15th October, 1945, and for the cloth business from 21st April, 1944, to some date in April, 1945.

(2.) THE case of the assessee was that there had been a partition in the family, that the money-lending business had been divided on the 26th of September, 1944, between Nihori Lal and his six sons, three of whom were majors and three were minors, that the cloth business had been partitioned on the 20th of April, 1944, and the assets divided into seven parts in the same way as the assets of the money-lending business. THE case of the assessee was that after these divisions on 20th April, 1944 and 26th September, 1944, respectively the cloth business and the money-lending business had been carried on in partnership and that on 21st March, 1945, a deed of partnership had been executed which was registered by the Registrar of Joint Stock Companies on 28th of September, 1945. THE assessee filed an application under Section 26A for registration of this firm which was said to have been started after the partition and also claimed a right to be assessed as a firm and not as a Hindu undivided family. THE claim of the assessee that there had been partitions, as stated above, was not accepted by the Income tax Officer and the Appellate Assistant Commissioner. THE matter was taken up in appeal before the Appellate Tribunal, and that Tribunal recorded the following finding:

(3.) THE question referred to us by the Tribunal is as follows: