1963 PLP 374 (PTD)
COMMISSIONER OF INCOME‑TAX Versus KISHORE CHAND RAMJI DASS
| Citation | 1963 PLP 374 (PTD) |
| Forum / Court | Punjab India |
| Bench Members | G. D. Khosla, C. J. and Dulat, J. |
| Parties | COMMISSIONER OF INCOME‑TAX Versus KISHORE CHAND RAMJI DASS |
| Primary Law | STATEMENT OF CASE |
Q1: What are the key laws and sections cited in 1963 PLP 374 (PTD)?
This judgment primarily cites: STATEMENT OF CASE as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1963 PLP 374 (PTD)?
The case was heard and decided by the Punjab India bench comprising: G. D. Khosla, C. J. and Dulat, J..
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1963 PLP 374 (PTD) (COMMISSIONER OF INCOME‑TAX Versus KISHORE CHAND RAMJI DASS). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Headnotes / Summary
Income‑tax Act (XI of 1922), S. 26‑A‑Firm‑Registration Share of minors mentioned collectively ‑ Refusal of registration -Legality. The mere fact that the shares of some minors in a firm were shown collectively and the share of each one of them was not separately stated in express words, is not a sufficient ground for refusing registration of the firm, if it is clear from the context beyond doubt that the minors took the share allotted to them collectively, in equal shares. Jabalpur Ice Manufacturing Association v. Commissioner of Income‑tax (1955) 27 I T R 88 ; M. Kannappa Naicker & Co. v. Commissioner of Income‑tax (1937) 5 I T R 49 and Steel Brothers & Co. Ltd. v. Commissioner of Income‑tax (1958) 33 I T R 1 ref. By this application, the Commissioner of Income‑tax requires the Tribunal to refer to the High Court certain questions of law which are said to arise out of the Tribunal's order in I. T. A. No. 1120 of 1954‑
55. Inasmuch as, in our opinion, certain questions of law do arise out of the aforesaid order, we hereby draw up a statement of the case and refer it to the High Court of Judicature for the State of Punjab under section 66 (1) of the Income‑tax Act.
2. The appeal out of which the application arises' was directed against an order passed by the Commissioner of Income-tax, Pepsu, Himachal Pradesh and Bilaspur, under section 33‑B of the Indian Income‑tax Act whereby he set aside the order of the Income‑tax Officer granting renewal of registration to the assessee firm under section 26‑A of that Act for the assessment year 1951‑
52. The circumstances in which the Commissioner of Income‑tax came to pass his aforementioned order were these.
3. The assessee firm was originally constituted in the year 1929, the partners being L. Khetamal and his five sons, Kishore Chand, Ramjidas, Dayal Chand, Roshan Lal and Balbir Chand. On 31st March 1947, on account of waywardness of the partner, Balbir Chand, he was made to retire from the partnership, and his share was allotted as follows by a fresh instrument then drawn up; To his three minor sons (Mohinder Pal, Harish Chander and Romesh Chander) by this deceased first wife ... 1/10th To his second wife Smt. Kaushalia Devi ... 1/20th To his minor son Surrendar Kumar by Smt. Kaushalia Devi ... 1/20th
4. On 24th October 1947, Khetamal, the father, died and thereupon another instrument dated 3rd December 1947, was executed in which again the shares of the minor sons of Balbir Chand and Smt. Kaushalia Devi were similarly set out. On the basis of this instrument, registration was granted to the firm for the assessment year 1948‑49, and renewal thereof accorded for the years 1949‑50 and 1950‑
51. For the assessment year 1951‑52, too, which was under appeal, the Income‑tax Officer granted renewal, but the Commissioner of Income‑tax cancelled that order in exercise of his powers under section 33‑B of the Income-tax Act.
5. One of the reasons which the Commissioner of Income‑tax had mentioned in support of his order was that, after the retirement of Balbir Chand his minor sons had been made full partners which was opposed to the terms of section 30 of the Indian Partnership Act. On a reference to paragraph 4 of the instrument, however, (paragraph 2 which has been mentioned in the Tribunal's order in this respect is a mistake for paragraph 4) it was noticed that the minor sons of Balbir Chand had been admitted only to the benefits of the partnership. The Tribunal accordingly held that this reason was not tenable. No question of law, in our opinion, arises from this part of the Tribunal's order.
6. Another ground which the learned Commissioner had relied on was that in the instrument of partnership the share of the three minor sons of Balbir Chand from his first wife had been cumulatively shown as 1/l0tb, but the individual share of each had not been specified therein. This ground, too, did not appear to the Tribunal to be tenable for, in the context, there seemed no doubt that these three minors were to share their collective 1/10th.share equally. The Tribunal observed that, on the basis of this very same instrument, registration for the year 1948‑49, and renewal of registration for the two immediately succeeding years had actually been granted by the Income‑tax Authorities.
7. The third reason which had been stated by the Com missioner of Income‑tax in support of his order was that in the application for renewal of registration presented by the parties the share of Kaushalia Devi and of the four minor sons of Balbir Chand had been lumped together and shown as 1/5th. The Tribunal was unable to agree that this slight defect in the applica tion could take away from the assessee firm the privilege which it otherwise had under the Act of obtaining registration for the account year under appeal. The Tribunal 'pointed out that in the application for renewal of registration for the two immediately preceding years the share of these partners was shown in exactly the same way and no objection bad been taken by the Income‑tax Officer in that behalf. The instrument of partnership on the basis of which registration was initially granted was available on the record and the individual shares of Kaushalia Devi and of the minor sons in their cumulative 1/5th share were known. This reason of the Commissioner of Income‑tax for reversing the order of the Income‑tax Officer did not accordingly commend itself to the Tribunal.
8. Taking all the circumstances of the case into considera tion, the Tribunal felt that the order of the Commissioner of Income‑tax could not be maintained. The order of the Tribunal is Annexure "A" and forms part of the case.
9. In our opinion, the following questions of law arise from the afore‑mentioned order of the Tribunal; "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the three minor sons of Balbir Chand, viz., Mohinder Pal, Harish Chander and Romesh Chander, were to share their collective 1/10th share equally ? (2) Whether, on the facts and in the circumstances of the case, the assessee's application for renewal of registration merited rejection on the ground that the shares of Kaushalia Devi and the four minor sons of Balbir Chand were cumulatively shown therein as 1/5th ?"
10. This statement has been agreed to by the parties. S. M. Sikri and Hemraj Mahajan for the Commissioner. . Kirpa Rant Bajaj, Raj Kumar Aggarwal, Kuldip Chand and J. L. Bhatia for the Assessee.
Judgment & Decree
DULAT, J.--‑A partnership firm consisting of L. Kheta Mal and his five sons‑Kishore Chand, Ramji Das, Dayal Chand, Roshan Lal and Balbir Chand‑was constituted in the year 1929. Later, in March 1947, one of the sons, Balbir Chand, was made to retire from the partnership and his share was allotted as follows; (1) To his three minor sons, Mohinder Pal, Harish Chander and Ramesh Chander, by his deceased first wife : 1/10th (2) To his second wife, Smt. Kaushalia Devi 1/20th (3) To his minor son, Surrendar Kumar, by Sint. Kaushalia Devi : 1/20th The instrument of partnership was signed by their uncle, Kishore Chand, on behalf of Mohinder Pal, Harish Chander and Romesh Chander, and by Sint. Kaushalia Devi on behalf of her son Surrendar Kumar. It was mentioned in the deed that the minors had been admitted to the benefits of the partnership. In October 1947, the father, Kheta Mal, died and thereupon another instrument of partnership was executed on the 3rd December 1947, the shares of the minors being mentioned as; (1) L. Kishore Chand son of L. Kheta Mal : 1/5th (2) L. Ramji Dass son of L. Kheta Mal: 1/5th (3) L. Dayal Chand son of L. Kheta Mal : 1/5th (4) L. Roshan Lal son of L. Kheta Mal : 1/5th (5) Mohinder Pal, Harish Chander and Romash Chander, minor sons of L. Balbir Chand, through Kishore Chand, their uncle : 1 / 10th (6) Surrendar Kumar son of L. Balbir Chand, through Sint. Kaushalia Devi, his mother : 1/20th (7) Smt. Kaushalia Devi, wife of L. Balbir Chand : 1/20th The Income‑tax Officer allowed registration of the firm under this deed of partnership for the year 1948‑49, and it was renewed for the years 1949‑50 and 1950‑
51. Renewal was also allowed by the Income‑tax Officer for the next year 1951‑
52. This matter, however, came to the notice of the Income‑tax Commissioner and he, acting under section 33‑B of the Income‑tax Act, set aside the order of the Income‑tax Officer granting renewal for the year 1951‑52, holding that the shares of all the partners were not specified inasmuch as the shares of Mobinder Pal, Harish Chander and Romesh Chander were not separately mentioned, although their total share in the partnership was specified as 1/10th, and further that in the renewal application, apart from the partnership deed, the share of Shrimati Kaushalia Devi and the shares of Balbir Chand's sons were shown together as 15th and not separately specified. Against the learned Commissioner's order, an appeal was taken to the Income‑tax Appellate Tribunal, and that Tribunal found that the reasons mentioned by the Commis sioner of Income‑tax for refusing renewal of registration were untenable. The Tribunal held that in the context of the relevant facts, there could be no doubt that when the partnership deed stated that Mohinder Pal, Harish Chander and Romesh Chander held 1/10th share in the partnership, it meant that these three minors held that 1/10th share in equal shares. The Tribunal concluded, therefore, that it was not right to say that the shares of these three minors were not specified. On the second matter the Tribunal held that the small defect in the application for renewal, that the shares of the minors and Kaushalia Devi were lumped together and shown as 1/5th of the total partnership, was immaterial because the deed of partnership, which accompanied the application, left no doubt about the exact shares of the partners. The Tribunal was, therefore, of the view that the renewal application was properly allowed by the Income‑tax Officer and ought not to have been refused by the Commissioner of Income‑tax. The Tribunal allowed the appeal and restored the order of the Income‑tax Officer. The Commissioner of Income‑tax then applied to the Tribunal to refer two questions of law to this Court, and the Tribunal, although feeling that the questions were essentially of fact, agreed to refer the following two questions for decision by this Court; "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the three minor sons of Balbir Chand, viz., Mohinder Pal, Harish Chander and Ramesh Chander, were to share their collective 1/10th share equally? (2) Whether, on the facts and in the circumstances of the case, the assessee's application for renewal of registration merited rejection on the ground that the shares of Kaushalia Devi and the four minor sons of Balbir Chand were cumula tively shown there as 1/5th." The answer to the first question must turn on the considera tion of the deed of partnership and there can, in my opinion, be no doubt that if that deed is properly read, the meaning is perfectly clear that the 1/10th share falling to Mohinder Pal, Harish Chander and Romesh 'words, is to be divided equally among them, or, in other words, that they are to share equally in the benefits of the partnership to the extent of 1/10th share. I say this because no other meaning to this particular recital in the deed of partnership seems reasonable, and I find that anyone reading the deed as a whole can be left in no doubt about this matter. The Commissioner of income‑tax appears to have been influenced by the circumstance that it was not mentioned in so many words that these three minors were to share equally in the 1/10th share allotted to them, but that is of no consequence, for the context is eloquent in that connection, and the Income‑tax Appellate Tribunal was, in my opinion, justified in holding that Mohinder Pal, Harish Chander and Ramesh Chander were to share their collective 1/10th share equally. Mr. Sikri referred to some decided cases in this connection, but those cases deal with entirely different sets of facts very unlike the present. Thus in Jabalpur Ice Manufacturing Association v. Commissioner of Income‑tax ((1955) 27 I T R 88) the firm sought to be registered, namely, Jabalpur Ice Manufacturing Association, consisted of two firms: (1) Bharat Ice and Aerated Waters Ltd., and (2) The Nerbudda Ice Factory holding equal shares. It was found that the Nerbudda Ice Factory belonged to two partners, Purshottam Lal Sood and Bhoora Ram, and it was held therefore that the partnership sought to be registered had three partners, namely, Bharat Ice and Aerated Waters Ltd., Purshottam Lal Sood and Bhoora Ram, and registration was refused because the individual shares of Purshottam Lal Sood and Bhoora Ram were not defined and also the application for registration was not signed by Bhoora Ram. Similarly, in Kannappa Naicker & Co. v. Commis sioner of Income‑tax ((1937) 5 I T R 49) a partnership consisted of certain individuals and another firm, but the shares of the partners of that other firm were never specified. Mr. Sikri also referred to a decision of the Supreme Court, Steel Brothers & Co. Ltd. v. Commissioner of Income‑tax ((1958) 33 I T R 1 (S C)) but there again the question was entirely different, for, while a partnership was sought to be registered on the ground that it consisted of two partners, it was found as a fact that there were three partners and, of course, the share of the third partner was never specified in the deed or in the application for registration. The present case is totally different and what we have to look for here is not any rule of law governing such a matter but the proper meaning to attach to certain words used in a particular context in a deed of partner ship. As I have said, the context leaves no doubt about the meaning, and once the meaning is clear no legal problem remains. I am satisfied that the Appellate Tribunal rightly considered the deed of partnership as meaning that Mohinder Pal, Harish Chander and Ramesh Chander were to take the 1/10th share in equal shares. The answer to the first question posed by the Appellate Tribunal must, therefore, be in the affirmative. The second question rests on a mere technicality, for, if it is, as I have found it, that the deed of partnership did specify the individual shares of the partners, then the mere circumstance, that in the application for renewal the shares of the minors and Kaushalia Devi were lumped together, should not result in the rejection of that application. As the Appellate Tribunal has pointed out, the deed of partnership was attached with the application for renewal, so that the facts themselves could be in no doubt. It is significant that identical application for renewal had on two previous occasions been granted by the Income‑tax officer, and the small omission in the renewal application was never noticed. The Appellate Tribunal was in the circumstances, entitled to hold that the Commissioner of Income‑tax was not justified in refusing renewal of registration on account of an error of this kind. I share the view of the Appellate Tribunal and am wholly unable to agree that as a matter of law renewal of registration merited rejection on the ground mentioned by the Commissioner of Income‑tax. The answer to the second question posed by the Appellate Tribunal must, therefore, be in the negative. With these answers I would return the reference. Costs of the reference are to be paid by the Commissioner of Income‑tax which are assessed at Rs.
100. G. D. KHOSLA, C. J.‑I agree. Reference answered accordingly.