IN RE: BAI SAKINABOO Vs. STATE

JUDGEMENT

(1.) In this case the learned Commissioner has referred to us two questions, viz.,

(2.) The framing of these questions certainly suggests to my mind that the learned Commissioner was not quite certain as to whether the questions which he was raising were questions of fact or of law. It is the duty of the Income-tax Officer to find facts clearly, and the duty of the Commissioner to state the facts and then to formulate the questions of law which arise upon them. In this particular case the question is whether there is a partnership or a firm which ought to be registered by the Income-tax Officer under the provisions of the Indian Income-tax Act. Whether there is a firm or not in existence is prima facie a question of fact, but may also involve a question of law. The Income-tax Officer ought to have found what the facts are much more clearly than he has done.

(3.) The position appears to be that the assessee Bai Sakinaboo Salebhoy inherited from her father a sum of Rs. five lakhs which she invested in certain shares which produced a large income, a sum of Rs. 74,000 odd. She sent to the Income-tax Officer for registration what is called an instrument of partnership, which does no more than this; it purports to show that the respective shares of the lady in question and her three minor children in the profits of the firm, known by the name and style of Sookinaboo Shalebhoy, are as specified. It does not show what the business of the firm is, or what the assets are, or what the profits are derived from. The instrument only states that the profits are divisible in certain shares between the lady and her three infant partners In my view no such firm can exist in law. The word partnership is thus defined in Section 239 of the Indian Contract Act.