ARVIND N MAFATLAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) The firm of Mafatlal Gagalbhai & Sons consisted of four partners: Navinchandra Mafatlal, Arvind N. Mafatlal, Yogindra N. Mafatlal and Hemant Bhagubai. The respective shares of the four partners in the profits and assets of the firm were five annas, three annas, three annas and five annas. The firm was registered under the Indian Income -tax Act. The firm owned forty shares of a private limited company, Mafatlal Apte and Kantilal, Ltd., registered under the Phaltan State Companies Act. having its registered office at Sakarwadi in the former Phaltan State. Out of these forty shares, ten shares stood in the name of Navinchandra Mafatlal, ten shares stood in the name of Arvind N. Mafatlal & the remaining twenty shares stood in the name of Hemant Bhagubai minor by his guardian Mrs. Sharda Bhagubai. Mafatlal Apte and Kantilal, Ltd., which will hereafter be referred to as "the Company", were the Managing Agents of Phaltan Sugar Works, Ltd., which was also a Company registered under the Phaltan State Companies Act, having a factory at Phaltan. In the former Phaltan State the Indian Income -tax Act, 1922, was adopted almost verbatim by the Phaltan Income -tax Act III of 1941 as amended by the Phaltan Income -tax Act VIII of 1942. Navinchandra Mafatlal, whom I will hereafter refer to as "the assessee", was, as regards the Phaltan State Income -tax Act, a non -resident. The company held its General Meeting on 11th March 1946 and before the General Meeting the accounts for the year ending 30th September, 1945, were placed for adoption. The accounts showed a profit of Rs. 1,03,165/ - for the year ending 30th September, 1945, but no dividend was declared by the Company. On the profit the Company paid Rs. 34,114/ - as income -tax and Rs. 6,323/ -as super -tax and the net profit remaining with the Company was Rs. 68,228/ -.

(2.) AFTER the merger of the Phaltan State, by Section 7 of the Taxation Laws (Extension to Merged States and Amendments) Act LXVII of 1949 the Phaltan State Income -tax Act in of 1941 stood repealed, except for purposes of levy, assessment and collection of income -tax and super -tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income -tax Act, 1922, as ox -tended to the Phaltan State by Section 3. By Section 3 of that Act, the Indian Income -tax Act, 1922, and several ether Acts and the Rules made thereunder, which were in force immediately before the commencement of the Act in the dominion of India were extended to the territory of the former Phaltan State as from 1st April, 1949. On 17th March, 1951, the Income -tax Officer, Satara North, passed an order under Section 23 -A of the Indian Income -tax Act directing that the

(3.) WHEN this application was placed for hearing for Rule before the learned Chief Justice and Mr. Justice Tendolkar the Court ordered that Rule "confined to the order, dated 12th October, 1955, be, issued." It is evident in view of the order passed by this Court that the petition, in so far as it challenges the validity of the assessment order passed by the Income -tax Officer on 28th October, 1951, has been disposed of, and in this petition we are only concerned to decide whether a Writ of Certiorari may be issued quashing the order, dated 12th October, 1955.