SHAPURJI PALLONJI Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This is a reference under Section 66(1) of the Indian Income-tax Act, and the question referred to us is this: Whether, on the facts found by the Tribunal in this case, the Income-tax Officer is by reason of the registration under Section 26A of the instrument of partnership dated November 15, 1937, prevented or estopped from taxing in the hands of the assessee profits representing the share of ten annas and eight pies in full?

(2.) The applicant and his brother, Mr. P.P. Mistry, were partners in a firm of building contractors under a partnership, dated September 24, 1929. On November 15, 1937, they and the applicant's son entered into a deed of that date. An examination of the deed shows that it contained a recital which states: And Whereas from the 15 day of November 1937 the parties of the first and second parts took the party of the third part as a partner in the said business and whereas the parties are desirous of recording by these presents the constitution of the firm.... Then there are set out various rights and duties of partners, and finally the shares of the partners in the profits and losses of the business, which shows the applicant as being entitled to 6-2/3 annas share, his brother P.P. Mistry to 5-1/3 annas share, and his son Kaikhushroo to four annas share.

(3.) Mr. Setalvad admits that it is not open to him, having regard to the terms of the reference, to say that that document ought never to have been registered at all on the ground that it is not a document constituting a firm, and it is agreed that no such point can be taken before us.