NIAMATULLAH - (1.) -
(2.) THIS is a reference by the Commissioner of Income Tax on a direction of this Court on an application made by an assessee. The facts are somewhat complicated. There is a joint family in Muttra which has various firms and one of those firms is styled Parbhu Lal Pearey Lal. THIS firm Parbhu Lal Pearey Lal has been in existence with effect from to the year 1932-33. Previous to that there was no separation in the joint family and the joint family was somewhat loosely described as Parbhu Lal Pearey Lal. An assessment was made for the year 1931-32 on the income Tax Officer of Muttra found in the books of the joint family a certain khata called Onkar Mal Babu Lal sir account which stood as follows :- JUDGEMENT_197_ITR3_1935Html1.htm Enquiries were made from Bombay and it was found that the Bombay firm of Onkar Mal Babu Lal had heavy losses during the year under assessment and the Muttra join family Parbhu Lal Pearey Lal had also losses. No income-tax therefore was assessed on either the join family in Muttra or the firm Onkar Mal Babu Lal in Bombay, but the income-tax authorities have assessed income-tax on what they allege to be a firm constituted by the partners, one partner being the joint family Parbhu Lal Pearey Lal in Muttra and other partner being the firm Onkar Mal Babu Lal in Bombay. The transactions of this alleged partnership show a profit and therefore that profit has been assessed to income-tax. Objections were overruled and Parbhu Lal Pearey Lal also submitted an application to the Income Tax Commissioner to make a reference to this Court. The Income Tax Commissioner held that no question of law arose as in his opinion there was a partnership. This Bench held that the decision as to whether there was partnership was a decision on a question of law and that as a question of law had arisen under Section 60 (2) the Income Tax Commissioner was bound to make a reference to this Court. Accordingly this Court selected seven of the questions in the application of Parbhu Lal Pearey Lal and required the Commissioner to make a statement on the case. That statement has now been supplied. The first of these questions is : Whether the association of the firm, Messrs. Parbhu Lal Pearey Lal of Muttra and of the firm Messrs. Onkar Mal Babu Lal of Bombay in certain joint transactions in 1929-30 could and did form in law a new partnership or a new firm within the meaning of Section 239 of the Indian Contract Act or of any other law.
(3.) LEARNED counsel for Commissioner has taken objection to the wording of this question and he alleges that the attention of the Income Tax Commissioner was not drawn to the importance of the word "firm" and that in fact Parbhu Lal Pearey Lal of Muttra during the year in question were not a firm but were a join Hindu family. This in fact has been stated by the Commissioner. LEARNED counsel desired further that enquiry should have been made in regard to Onkar Mal Babu Lal of Bombay. But we consider that it is too late now to raise any point as to whether Onkar Mal Babu Lal are a firm or a joint Hindu family as all long they have been described by an association of a joint Hindu family in Muttra with a firm in Bombay. This question of the interpretation of the word "partnership" has been already before this Court. We may mention that in Section 3 of the Income Tax Act income-tax may be charged. On all income, profits and gains of the previous year of every individual, Hindu undivided family, company, firm and other association of individuals.;