COMMISSIONER OF INCOME TAX Vs. CLOTH SEMI WHOLESALERS
LAWS(BOM)-1954-12-11
HIGH COURT OF BOMBAY
Decided on December 17,1954

COMMISSIONER OF INCOME TAX Appellant
VERSUS
Cloth Semi Wholesalers Respondents


Referred Judgements :-

CIT,BURMA VS. M. A. BAPORIA AND ORS. [REFERRED TO]
MOHAMMAD ASLAM VS. COMMISSIONER OF INCOME TAX [REFERRED TO]





JUDGEMENT

- (1.)THIS is reference under s. 66(1) of the Indian IT Act to decide the following question of law : "Whether the group of semi -wholesalers of the Akola district was liable in law to be assessed as an unregistered firm or as an association of persons of income -tax and excess profits tax in respect of the total profits distributed amongst them, in accordance with the scheme formulated by the Government of the Central Provinces and Berar."
(2.)THE reference relates to the asst. yr. 1947 -48 in respect of the income for he previous year ending Diwali 1946, and for the asst. yr. 1948 -49. Eleven semi -wholesalers of cloth at Akola were assessed in the status of an unregistered firm. The same group was also assessed to excess profits tax in respect of the chargeable accounting year from the 18th Nov., 1945, to the 9th March, 1946.
(3.)IN view of the acute scarcity of cloth in the Provide, a scheme was evolved by the Government for equal distribution of cloth amongst the consumers. A press note dated the 21st May, 1945, and the memoranda dated the 11th Sept., and the 10th Dec., 1945, which are annexures A to C to the statement of the case, details the scheme of distribution for the Akola district between the mills and the retailer from whom the consumer could obtain his supplies. There were two sets of distributors : importer and semi -wholesalers. The Government had appointed a nominee for each set. The importer had to take delivery of the bales from the mills according to the quota allotted by the Government and had to distribute that quota in bales to semi -wholesalers according to the orders of the Government. The semi -wholesalers had to distribute the quota to the retailers. A nominee of the semi -wholesalers was appointed by the Government to receive the quota and distribute it was appointed by the Government to receive the quota and distribute it to the retail dealers. The quota was supplied every month. Under the Control Orders the consumer could not be charged a price in excess of 20 per cent over the ex -mill price. This percentage included the payments to be made to the quota -holders of the mills, the importers, the semi -wholesalers and the retailers as also the cost of transport and distribution. The shares receivable by each set of distributors were fixed by the Government and included the cost of transport and distribution.
The quota of goods to be supplied to each semi -wholesaler was fixed by the Government but the goods were not to be supplied to him in that proportion. They were to be received from the importer by a nominee of the semi -wholesalers had to supply the finance to the nominee in proportion to the quota. After the monthly quota was distributed the nominee had to return the capital supplied by each semi -wholesaler and pay him his share of the excess of receipt over expenditure.



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