NAIK B R Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 of the Indian Income-tax Act, 1922. The assessee is a firm, and we are concerned with the assessment year 1939-40 and with the accounting year 1938-39. The firm carries on business in South Africa as general merchants, and its history is as follows

(2.) BEFORE 1912, Rao Bahadur B. R. Naik carried on this business on his own account. He returned to Bombay in that year, leaving his business in the hands of three managers. On May 26, 1937, a document was executed, which is aid to be a partnership deed. Since the year 1937 Rao Bahadur Naik has not returned to South Africa. Bearing in mind that the business is conducted in South Africa, and that Rao Bahadur Naik has resided continuously in Bombay since 1937, it is necessary to examine the document of partnership somewhat carefully before the problem which arises can be dealt with.

(3.) CLAUSE 2, which is a somewhat unusual clause provides :