COMMISSIONER OF INCOME-TAX Vs. GOSTHA BEHARI SADHUKHAN

JUDGEMENT

(1.) This is a Reference by the Income-tax Appellate Tribunal at ,the instance of the Commissioner of Income-tax, Calcutta. The facts concerned can shortly be stated as follows : For many years a business known as Gopal Pure Oil Mills was owned by a Hindu undivided family the members of which were Gostha Behari Sadbukhan and his three nephews, Sarat Chandra Sadhukhan, Rabindra Nath Sadhukhan aud Panchkari Sadhukhan. Up to and including the year of assessment, 1941-1942, this business was assessed as a Hindu undivided family. On 29-10-1912 an application was made to the Income-tax Officer under Section 26A(1), Income-tax Act, to register a deed of partnership. The Income-tax Officer refused to register it. The deed of partnership is dated 15-6-1942, made between Gostha Behari of the first part, Sarat purporting and stating as representative of himself and his brothers Rabindra and Panchkari of the second part and three other persona Amulya Charan Samanta, Jugal Krishna Das and Kartic Chandra Pramanik, who were, and had been for many years, employees of the- business. The deed recites that the parties, which clearly means Gostha Behari and Sarat, had been carrying on the business jointly till the end of the year 1345 B.S. corresponding to 13-4- 1939, and for better management of the business the parties agreed to carry on the business as partners. The shares in the. partnership are divided as to Gosto 5 as. 6 ps., Sarat 5 as. 6 ps., Amulya 2 as. 9 ps., Jugal 1 anna 3 ps. and Kartick 1 anna. The Income-tax Officer was not satisfied that previous to the execution of the partner, ship deed the business had been the subject of partition amongst the members of the family above mentioned and he refused to register the deed of partnership and assessed the profits of the business on the basis of a Hindu undivided family.

(2.) An appeal by the assessee was dismissed by the appellate Assistant Commissioner on 23- 6-1943 but a further appeal was allowed by the Appellate Income-Tax Tribunal by their order dated 11-12-1913. The Commissioner of Income-tax being dissatisfied with this order obtained a reference under Section 66 of the Act from the Appellate Tribunal for the following question to be answered by this Court: Whether the relationship between the five persons as evidenced by the deed dated 15-6-1942 is one of the partnership under the Partnership Act, 1932, or in the alternative "Is there any legal impediment to the recognition of the partnership".

(3.) It is common ground that before the deed of partnership could have been made between Gosta and Sarat and the other three parties, in respect of the business, that property of the joint Hindu family would require previously to have been partitioned.