S. R. DAS C. J.; - (1.) THE Judgment of the court was delivered by
(2.) THIS is an appeal from the judgment and order passed by a bench of the Nagpur High court on the 30/12/1953 in Miscellaneous Civil Case No. 35 of 1952, whereby the bench answered in the negative the question that had been referred to them by the Income Tax Appellate tribunal, Bombay under section 66(1) of the Indian Income Tax Act, 1922 (hereinafter referred to as the Act). In connection with the assessment for the assessment year 1949/1950 of Dulichand Laxminarayan, an unregistered firm, an application was made under section 26-A of the Act before the Income Tax Officer, Raigarh for its registration as a firm constituted under a Deed of Partnership dated the 17/02/1947. In the opening paragraph of that deed the names and descriptions of the parties thereto were set out in the following words:-`We, Dulichand Laxminarayan Firm, through Malik (partner) Laxmi Narayan son of Laljimal, Laxmi Narayan Chandulal Firm through Malik (partner) Chandulal son of Nanakchand, Mulkhram Bholaram Firm through Malik (partner) Tekchand son of Bholaram, Jeramdas Hiralal Firm through Malik (partner) Beharilal son of Asharam and Mangatrai Ganpatram through Malik (partner) Ganpatram son of Mangatrai, Agarwar Bani, aged 50, 40, 28, 25, 45 residing at Raigarh are partners in equal shares with effect from 5/1/19466 -in the firm Dulichand Laxminarayan in whose name Importers' Licence of cloth is issued for Raigarh State group Raigarh, Jaipur Saraigarh, Udeypur and Sakti State, on the following terms and conditions........................ Then follow 15 clauses containing the terms on which the partnership business was agreed to be done. At the foot of the deed signatures were appended in the following order one below the other: JUDGEMENT_354_AIR(SC)_1956Html1.htm It is common ground that out of the five constituent parties Dulichand Laxminarayan, Jairamdas Hiralal and Laxminarayan Chandulal are separate firms constituted under three separate deeds of partnership and that Laxminarayan, Beharilal and Chandulal, who signed the deed on behalf of those firms are partners in their respective firms. There is also no dispute that Mukbram Bholaram is the name of a business carried on by a Hindu undivided family of which Tekchand, who has signed for it, is the Karta. It is also conceded that Mangatrai Ganpatrai is an individual. The application for registration was signed by the same five individuals who bad signed the deed of partnership. 356
(3.) FINDING that Dulichand Laxminarayan constituted under the aforesaid Deed of Partnership dated the 17/02/1947 consisted of three firms, one Hindu undivided family business and one individual and taking the view that a firm or a Hindu undivided family could not as such enter into a partnership with other firms or individuals, the Income-Tax Officer held that the said Dulichand Laxminarayan could not be registered as a firm under section 26-A and accordingly on the 26/02/1950 he rejected the application. On appeal the Appellate Assistant Commissioner held that when a firm entered into a partnership with another firm the result in law was that all the partners of each of the smaller firms became partners of the bigger firm and, therefore, there was no legal flaw in the constitution of the bigger firm of Dulichand Laxminarayan. He, however, took the view that, as the application for registration had not also been signed personally by all the partners of those three smaller firms as required by section 26-A of the Act and rule 2 of the Rules framed under section 59 of the Act, there was no valid application for registration and consequently the firm could not be registered. The result was that on the 5/08/1950 the Appellate Assistant Commissioner dismissed the appeal.;