KALYANJI VITHALDAS Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THESE six appeals concern the assessment to supertax for the year 1931-32 of six of the seven partners of a firm known as Moolji Sicka & Co. This firm was for the year in question registered under Section 26A of the Indian Income-tax Act, the instrument of partnership being a Gujarati deed dated September 11, 1930. Its business was that of dealers in Indian tobacco and cigarettes. The assessment to income-tax of the registered firm has been made in due course, and the present controversy is whether six of the partners should each be assessed to super-tax upon his share of the profits as an individual, or whether these six shares should each be assessed as income of a Hindu undivided family. The rates of super-tax imposed by the relevant Finance Act are less in the case of a Hindu undivided family than in the case of an individual.

(2.) THE problem has to be answered by applying to the facts of each case the language of Section 55 of the Act : In addition to the income-tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the previous year of any individual, Hindu undivided family, company, unregistered firm or other association of individuals, not being a registered firm, an additional duty of income-tax (in this Act referred to as super-tax) at the rate or rates laid down for that year by Act of the Indian Legislature : Provided that, where the profits and gains of an unregistered firm have been assessed to super-tax, super-tax shall not be payable by an individual having a share in the firm in respect of the amount of such profits and gains which is proportionate to his share.

(3.) THE parties are governed by the Mitakshara and their pedigrees and families may be exhibited as under : I Sicka | ________________________________________________ 1933) |Moolji | | | || | | Purshottam (d. Dec. wifeOdhavji (son)daughter __________________________ |Kanjiwife Sewdas wife |Mohan Das daughter II Vithaldas | ||| Kalyanji Chaturbhuj Champsiwife wife 3 sons daughter daughter THE history of the firm according to the Commissioner is that in or about 1912 the business was begun by Moolji and Purshottam (brothers who had separated) and Kalyanji (who is not related to either), and that in no case were ancestral funds employed for the purpose. That in 1919 Moolji made gifts of capital to each of his sons by his first wifeviz., Kanji and Sewdas. That at least since 1919 Moolji, Kanji and Sewdas have been separate from each other. That in 1919 on the terms of a Gujarati deed dated May 1, Kanji (son of Moolji) and Chaturbhuj (brother of Kalyanji) were taken into the partnership. That in 1930 Sewdas and Kalyanji's brother Champsi were taken into the firm on the terms of the deed of September 11, 1930, already mentioned. That the interest of Kanji and of Sewdas was a gift from their father Moolji, and that of Chaturbhuj a gift from his brother Kalyanji. That in no case has it been proved that the individual partner has thrown his interest in the firm or his receipts there- from into the common stock, i.e., treated it as joint family property. THEir sionee op Lordships are of opinion that the High Court was right in proceeding upon these findings of fact by the Commissioner.