RAMNIKLAL SUNDERLAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A joint Hindu family consisted of one Ramniklal Sunderlal, his wife and his two sons. It appears that in March 1948, they partitioned some of the joint family properties and on 25th January, 1949, entered into an agreement of partnership between them. The partnership was to derive income from certain of the partitioned properties and was given the firm name of Messrs. Ramniklal Sunderlal. It is mentioned in the agreement that income derived from certain properties shall be divided by all the partners in equal shares and that income from leases also will be divided between the partners in equal shares. The work pertaining to courts, offices, recovery of rents etc., was agreed to be done by the father Ramniklal with the consent of the other partners. Later on there is a clause which says : 'This firm shall be entitled to carry on this partnership business and over and above this business any other business with the consent of all the partners.'

(2.) THE assessment year is 1953 -54. Neither in the relevant year nor in the years previous to that there was any dealing in land at all by the partnership. The only dealing was recovery of rent of the partitioned lands and the expenditure incurred towards the same was in respect of maintenance of a motor car and payment of telephone charges. In the assessment year 1948 -49 this partnership was registered under section 26A. For a few years thereafter also the partnership was recognised by the Income -tax authorities and was registered as a firm. For the assessment year 1953 -54, however, the Department revised the objection that this was not a partnership because it did not carry on any business. The Income -tax Officer refused registration and assessed the assessee as an association of persons. The income was assessed under section 12 of the Act.

(3.) THE question we are called upon to determine is : 'Whether on the facts and in the circumstances of the case, the assessee can be said to be carrying on business and whether it is entitled to the benefits of registration under section 26A ?'