COMMISSIONER OF INCOME TAX Vs. STANDARD MERCANTILE COMPANY

JUDGEMENT

(1.) IN a reference under Section 256(2) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the INcome-tax Appellate Tribunal, Patna Bench 'A', Patna, has submitted a statement of the case and sought the opinion of this court on the following question :

(2.) THE relevant facts of the case as borne out by the record are these. While completing the assessment of M/s. Standard Mercantile Co., Kankerbagh Road, Patna, the ITO included the income from the sand and china clay business conducted at Rajmahal in the district of Santhal Parganas in the name of Standard Mercantile Co., Rajmahal. According to the assessee-firm, this business exclusively belonged to Sri Vasudeo Agarwalla, a partner of the assessee-firm. THE ITO found that the assessee had declared that business as a branch of this firm before the Sales tax Department. THE ITO also found that the entire finance for running that business at Rajmahal had gone from the books of the assessee-firm through the capital account of the aforementioned Vasudeo Agarwalla. THE income from the Rajmahal business was, therefore, included in the hands of the assessee-firm. THE orders of the ITO for the three assessment years in question, namely, 1963-64 to 1965-66, have been made annexures A, A-1 and A-2 to the statement of the case.

(3.) WE, accordingly, answer the question in the affirmative and hold that the Tribunal was correct in law in excluding the income of the Rajmahal business from the total income of the assessee-firm by holding that the said business belonged to Vasudeo Agarwalla as a proprietary concern. The assessee shall be entitled to its costs. Hearing fee Rs. 250 only.