COMMISSIONER OF EXCESS PROFITS TAX Vs. RAMNATH BAJORIA

JUDGEMENT

(1.) : This is a reference under s. 66(1) of the IT Act. The question referred is in the following terms:--

(2.) THE facts giving rise to this reference are as follows : For the hargeable accounting period commencing on 1st May, 1944, and ending on 30th April, 1945, and assessment was made under the EPT Act on the unregistered firm of Manton & Co. THE net demand was Rs. 1,48,260. THE firm consisted of three partners. On 23rd July, 1946, the business was sold by the firm to Ramnath Bajoria by an agreement. By cl. 2 of the agreement the price was fixed at Rs. 1,86,965-10-11 and was payable in certain instalments. Clause 7 of the agreement provided as follows :--

(3.) IT is not disputed under s. 14(2) of the EPT Act Bajoria is not liable for the demand of Rs. 1,48,260 made on Manton & Co. IT is however suggested that by reason of cl. 7 of the agreement Bajoria may be liable, but that is an entirely indefensible proposition. Clause 7 only says that Bajoria would be liable to excess profits tax for the year beginning with 1st May, 1945, and ending on 30th April, 1946. The demand to which I have referred is not for that period but for an earlier period namely from 1st May, 1944, to 30th April, 1945. Even if Bajoria was liable under cl. 7 of the agreement of IT authorities could not take advantage of the provision of that agreement and make Bajoria liable. IT is however clear that under cl. 7 Bajoria did not undertake the liability to pay the excess profits tax for the relevant period. He is not, therefore, chargeable for the excess profits tax which has been assessed by the EPTO.