COMMISSIONER OF INCOME-TAX Vs. HANS RAJ

JUDGEMENT

(1.) IN order to appreciate the answers which we propose to give to the questions referred to us, it would be proper to set out the relevant undisputed facts in the chronological order. For a proper understanding of the facts, a short genealogical table of the parties may be stated : Mehtab Shah Jaini | | | | | muni Lal Moti Lal Bhim Sen Hans Raj (1) (2) (3) (4)________|______________ _|______________ |___ | | | | | | | | manohar Roshan Tilak Dharam Shadi Madan Joginder Sat Lal Lal Chand pal Lal Lal pal pal (5) (7) (9) (11) (6) (8) (10) (12)

(2.) ALL these members of the family of Mehtab Shah have been given numerical numbers for facility of reference as the narration of facts will show. The four sons of Mehtab Shah Nos. 1 to 4 constituted a joint Hindu family at the time when the Income-tax Act, 1918, was in force. In the year 1932, after the coming into force of the 1922 Act, these four sons effected a partition whereby the joint Hindu family ceased to exist. After the dissolution of the joint Hindu family, these four sons constituted themselves into a partnership. On the 25th of March, 1950, Nos. 5 and 6, Manohar Lal and Shadi Lal, sons of Muni Lal and Moti Lal, respectively, were taken as partners. The consequence thereof was that the share of each of the partners was re-determined. It may be mentioned that Muni Lal, Moti Lal and Hans Raj constituted joint Hindu families with their respective sons. On the 14th of April, 1956, the joint Hindu families of Muni Lal, Moti Lal and Hans Raj disrupted. As a consequence thereof, the remaining three sons of Muni Lal, Nos. 7, 9 and 11, and two sons of Moti Lal, Nos. 8 and 10, and Sat Pal, No. 12, the only son of Hans Raj, were taken as partners of the firm. The shares of the partners were again re-determined.

(3.) FOR the assessment year 1956-57, Muni Lal, Moti Lal and Hans Raj made a claim under Section 25 (4) of the 1922 Act, and the firm made a claim under Section 25 (3) or 25 (4 ). The claim of Mum Lal, Moti Lal and Hans Raj was that their joint Hindu families having dissolved and the business carried on by them as representatives of the joint Hindu families having been succedeed to by the members thereof who have become partners in the business, there is a case of succession within the meaning of Section 25 (4) and, therefore, they are entitled to relief under that provision. So far as the firm is concerned, its claim was that the firm that carried on business up to 14th of April, 1956, dissolved by reason of the introduction of the new partners and, therefore, the newly constituted firm was entitled to the benefit either under Section 25 (3) as having discontinued the earlier business or under Section 25 (4), there being succession to the earlier business.