BHOPAL TRADING CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE cases arise out of the assessment for several years of the same assessee, the Bhopal Trading Company, which was assessed to income-tax and excess profits tax as an unregistered firm.

(2.) IN Bhopal State outside British INdia, there was a limited liability company, known as The Straw Products Ltd. The assessee firm was the selling agent of that company and had an office in Bhopal. It had not been assessed to income-tax prior to 1942 but on the 11th of September, 1942, a notice under section 22(2) of the INdian INcome-tax Act was issued to the assessee in Bhopal State. On the 18th of September, 1942, the assessee firm sent a reply stating that as it had not office at Kanpur and carried on business and had its office outside the jurisdiction of the INcome-tax Officer, the notice and the blank form for submitting a return were returned. On the 25th of September, 1942, the INcome-tax Officer informed the assessee that the Commissioner of INcome-tax, Central Provinces and United Provinces, had assigned the case of the assessee to him under section 5(5) of the INcome-tax Act, 1922, and he therefore had jurisdiction whether the assessee firm had or had not an office at Kanpur; and he asked the assessee to appear at Kanpur in person or through an authorised agent on the 2nd of October, 1942, at 11 a.m. and produce evidence in proof of its contention. On the 15th of October, 1942, the assessee re-asseted that the INcome-tax Officer had no jurisdiction and that the assessee was, therefore not prepared to submit to his jurisdiction as desired. On the 15th of February, 1943, the INcome-tax Officer served a notice under section 22(4) of the Act on Sohanlal Singhania, one of the partners of the assessee firm. On the 24th of November, 1943, a similar notice under section 22(4) was sent to the assessees office at Bhopal. On the 15th of December, 1943, the INcome-tax Officer made an assessment order under section 23(4) of the Act holding that Rs. 36,000 was the assessable income, the whole of which had accrued or arisen or must be deemed to have accrued or arisen in British INdia. He also held that the firm had only two partners, Sohan Lal Singhania and Purshottam Das Singhania, both of whom were residents of Kanpur, that the business was carried on at or controlled from Kanpur in British INdia and that the assessee was therefore ordinarily resident in British INdia. The shares of the two partners were assumed to be half and half.

(3.) THOUGH in the first paragraph of the statement of the case it is mentioned that a reference was being made under section 66(1) of the Income-tax Act and section 21 of the Excess Profits Tax Act read with section 66(1) of the Indian Income-tax Act, and in paragraph 3 it is accounting period were the calendar years 1942, 1943 and 1944, the questions formulated do not relate to the Excess Profits Tax Act at all. The points of law in the excess profits tax references that might have to be considered might be entirely different in the income-tax references. In this connection we may draw attention to the third proviso to section 5 the Excess Profits Tax Act, which is as follows :