KANHAIYA LAL GOENKA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This is a reference under Section 66(2), Income-tax Act, and a case has been stated before us on the application of the assessee by the learned Commissioner of Income-tax, Central and United Provinces. Although the assessee in his application to the Commissioner formulated three questions of law, it is manifest that those questions were not happily worded in the application of the assessee and can be summarised, as the learned Commissioner has done, in one question. The question is: Whether in the circumstances of the case the assessee was entitled under Section 14(2)(b), Income-tax Act, to claim an exemption in respect of the amount of Rs. 59,011 received by him from the registered firm of Sadhuram Tularam at Calcutta when the firm itself was assessed to income-tax on a smaller sum, viz. Rs. 12,829 only.

(2.) This question arises before us in connexion with the assessment year 1934-35 when Seth Kanhaiya Lal was being assessed to income-tax by the Additional Income-tax Officer of Meerut. He was assessed on a total income of Rs. 59,371 and that income was made UD as follows:

(3.) It appears that the assessee is a partner in the registered firm of Sadhuram Tularam of Calcutta and the other two partners of the said firm are Gouri Shanker and Munna Lal. These three partners have invested large sums of money in the said firm and under the terms of partnership (this is what we gather from the record) they are entitled to certain interest on their investments. Kanhaiya Lal, the assessee, got a sum of Rs. 54,375 as interest from the Calcutta firm of Sadhuram Tularam, and this amount was taken into consideration by the Income-tax Officer of Meerut when he was assessing Kanhaiya Lal at Meerut. The firm itself was assessed to income-tax at Calcutta for the assessment year 1934-35 on an income of Rs. 12,829. This income was made up of the following items: