- (1.) THIS is a writ petition under article 226 of the Constitution of India. The relief sought by this writ petition is for the refund of a sum of Rs. 11,175-9-0 paid by the petitioner on September 1, 1946, as excess profits tax for the chargeable accounting period, October 19, 1942, to July 10, 1943. The relevant facts for the decision of the point involved in the case are as follows.
(2.) THE petitioner is a Hindu undivided family and it sued to carry on two businesses, namely, money-lending business and Banaras brocade business. On July 16, 1943, a partial partition took place in the family so far as the brocade business was concerned. THE brocade business of the Hindu undivided family was wound up. Its assets and liabilities were distributed amongst the coparceners and the business was no longer carried on by the family as such. Subsequent to the winding up and the distribution of the assets and liabilities between the coparceners, two partnerships were started and carried on brocade business similar to the one carried on by the family. It may be stated that the partners of the two firms were members of the Hindu undivided family. The partition and the setting up of the two partnership firms was treated by the excess profits tax authorities as being hit by the provisions of section 10A of the Excess Profits Tax Act and it was held that the partial partition in respect of the brocade business and the subsequent formation of the two partnerships and the carrying on of brocade business was for the avoidance and reduction of liability to excess profits tax. This view was upheld up to the reference stage in this court. The petitioner went up in appeal to the Supreme Court and the Supreme Court reversed the decision of this court on September 23, 1953. The findings of the Supreme Court were that there was in fact a partial partition, that the brocade business of the Hindu undivided family was wound up and the assets and liabilities distributed between the members constituting the Hindu undivided family, that subsequently two partnerships were formed for carrying on brocade business, that the partnerships which carried on the brocade business had nothing to do with the Hindu undivided family, that the profits of the partnership businesses were not the profits of the Hindu undivided family, and that these profits could not be taken into consideration in computing the liability of the Hindu undivided family for payment of excess profits tax. Consequent upon the decision of the Supreme Court, the Income-tax Appellate Tribunal on September 6, 1954, made an order under section 66(5) of the Income-tax Act cancelling the order of the Excess Profits Tax Officer under section 10A. The necessary consequence of the cancellation of the order under section 10A was that the petitioner became entitled to the refund of the excess profits tax paid by him. Accordingly, on September 23, 1954, the petitioner made an application to the Excess Profits Tax Officer, Varanasi, asking him to refund a sum of Rs. 60,761-15-0 to which the petitioner alleged himself to have become entitled as a consequence of the decision of the Supreme Court.
(3.) IN order to appreciate the stand of the petitioner it is necessary to consider the excess profits tax liability of the petitioner as determined by the department in respect of the chargeable accounting periods commencing from the 1st September, 1939, and ending on the 31st March, 1946. This may be illustrated best by the following table, which is incorporated in paragraph 11 of the affidavit filed in support of the writ petition : JUDGEMENT_523_ITR46_1962Html1.htm The excess profits tax paid is shown in the last column of the table. The excess profits tax authorities have allowed a refund of the last four sums of money paid as tax in respect of the last four chargeable accounting periods. That is as it should be, but the excess profits tax authorities have not allowed refund of the sum of Rs. 11,175-9-0 for the refund of which this writ petition has been filed. The last four items of excess profits tax became payable on the basis that the profits of the partnership businesses in brocade were the profits of the Hindu undivided family. It having been held that the brocade business after partial partition was no longer the business of the Hindu undivided family, the excess profits of the business could not be taken into consideration at all in computing the excess profits tax liability of the Hindu undivided family, and so the last four items of tax paid had in any case to be refunded.;