CURSETJI J DUBASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under sub -section (1) of section 66 of the Indian Income -tax Act. The facts leading to this reference in brief are :

(2.) MRS . Katie, wife of the assessee and mother of Gulu, was the lessee of the cinema theatre known as 'Kasturba Talkies' situate at Malad, a suburb in the City of Bombay. On 31st July, 1951, she entered into an agreement with one Pirojsha Rustomji Irani, for the running of the said theatre on certain terms and conditions as mentioned in the deed, annexure 'A' to the statement of the case. This agreement was treated as an instrument of partnership between herself and P. R. Irani. She died intestate on 1st February, 1957, and according to the personal law governing her, her heirs were her husband, the assessee before us, and her minor daughter, Gulu. A new agreement for the running of the theatre 'Kasturba Talkies' was entered into between C.J. Dubash, the assessee before us, acting for himself and as father and natural guardian of the minor daughter, Gulu, on the one hand, and P. R. Irani and S. P. Irani, on the other, on certain terms and conditions, as mentioned in the deed of 27th March, 1957, annexed to the statement of the case as annexure 'B'. An application for renewal of registration under section 26A was made. It was signed by the assessee for himself and for Gulu. In the relevant assessment year, 1958 -59, with which we are here concerned, the Income -tax Officer rejected this application for renewal of registration on the ground that this new firm had not been granted registration at any time before and as such the question of granting renewal does not arise. The assessment of the firm was made under section 23(3) read with section 23(5) (b), and the total income of the firm was allocated amongst the partners as shown in annexure 'F'. It appears that no appeal has been filed against the assessment order of the firm determining the amount of total income or its allocation amongst the partners under section 23(5) (b). The assessment order which is annexure 'D' to the statement of the case shows that Gulu, the minor daughter of the assessee, was shown as a partner in the firm.

(3.) MR . Kolah, appearing for the assessee, has contended before us that on a proper construction of the deed of date 27the March, 1957, it would be noticed that Gulu, who is a minor, has been made a full -fledged partner along with the other partners, and has not been admitted to the benefits of partnership; the deed of partnership has been signed on her behalf, and no provision for sharing losses is also made in the deed of 27th March, 1957. No partnership, as such, therefore, is constituted under the said deed. Reliance is placed by Mr. Kolah in support of his contention on the decisions reported in Commissioner of Income -tax v. Dwarkadas Khetan and Co. Commissioner of Income -tax v. Khetan and Co. and M. P. Devis v. Commissioner of Agricultural Income -tax.