CHAKRAVARTTI, C.J. - (1.) WE have felt some difficulty in dealing with this reference because of the form in which the question was referred or caused to be referred and because of the meaning which was sought to be attributed to it on behalf of the assessee.
(2.) THE assessee is an HUF, called Kaniram Hazarimull and one Indra Chand Kejriwal is its Karta. On the 18th April, 1933, Indra Chand entered into a partnership with eight other persons for the purpose of floating and obtaining the managing agency of a proposed mill to be called the Shankar Sugar Mills Limited. Clause 4 of the deed of partnership provided that the partnership capital was to be Rs. 12,00,000 to be contributed by the partners in accordance with their shares, that it would be applied by each partner to the purchasing or getting to be purchased shares of the proposed mill according to his share specified in the deed and that one-third of the share money was to be paid within a month and the remaining two-thirds on such dates as might be decided later. Clause 7 of the deed provided that the profits of the partnership would be ascertained and distributed between the partners according to their shares on the 30th September of each year. Indra Chand's share in the partnership was one-fourth. On the 11th May, 1935, a second deed of partnership was executed which in substance confirmed the earlier partnership. By that time the mill had been established and it appears from articles 135 and 136 of the articles of association of the mill company that the firm of managing agents was to get allowances and commission at certain scales. THE partnership deed of 1935 dealt with the managing agency profits in cl. 2 and it was provided that the profits would be divided among the partners in accordance with their shares--the share of Indra Chand Kejriwal being still one-fourth. THE question in the present reference is whether the one-fourth share of the managing agency income, derived by Indra Chand Kejriwal from the partnership, was rightly included in the assessment of the HUF in its assessments for the asst. yrs. 1940-41 to 1942-43. THE IT authorities as well as the Tribunal found that Indra Chand was a partner of the managing agency firm, not in his individual capacity but as the representative of the HUF and on that footing they came to the conclusion that the income derived by Indra Chand Kejriwal really belonged to the HUF whose books also showed it as a receipt. When asked to refer the question to this Court, the Tribunal declined to do so in the view that whether or not Kejriwal was a partner in his individual capacity or as a representative of the HUF was a question of fact in which no question of law was involved. Subsequently, the assessee moved this Court under s. 66(2) of the IT Act and obtained a direction upon the Tribunal to refer to this Court the following question of law : "Whether upon the facts and circumstances of this case the income of Indra Chand Kejriwal the Karta of the assessee, an HUF, which he derived as a partner of the partnership firm of Indra Chand Hariram formed part of the income of the said undivided Hindu family and could be assessed to tax as such ?" In due course, the Tribunal stated a case and the reference is now before us for decision. Mr. Gupta, who appeared on behalf of the assessee, wanted to argue the question as if it had asked whether, in law, the income of the Karta of an HUF derived by him as a member of a partnership could ever be the partnership income of the family itself. On behalf of the CIT, it was contended by Mr. Meyer that it was not open to the assessee to raise that extreme question of law as comprised in the question referred, because the controversy before the authorities below had always been on the basis that the Karta of an HUF could be a partner in a firm either in his individual capacity or as a representative of the HUF of which he was the Karta and that the only question which had been raised was, in which of the two capacities Kejriwal was a partner of the firm of Indra Chand Hariram in the present case. Mr. Meyer also complained that if the extreme question of law, now sought to be raised, had been raised before the taxing authorities, it might have been possible for the Department to make an alternative case that, in any event, the income having been found to have been received by the HUF could be rightly included among its assessable income and taxed as such. It was said that if the extreme question of law now sought to be raised was entertained and answered in favour of the assessee, it would succeed on a case never made before the authorities below and the Department would be deprived of the opportunity of taxing the income which it might have done on another basis. The case made before the authorities below appears sufficiently from the orders respectively recorded by them. Nothing appears to have been said before the ITO in course of the assessment for the asst. yr. 1940-41. The case made before the ITO in the course of the assessment for the year 1941-42 is thus stated in the assessment order : "It is claimed by the assessee that Babu Indrachand who is a Karta of the assessee HUF styled Kaniram Hazarimall, is the partner in the unregistered firm of Indrachand Hariram in his individual capacity and not in his representative capacity as Karta of the family and as such income from the share of the unregistered firm should not be included in the assessment of the assessee family." Again, the assessment order for the year 1942-43 contains the following statement : "As in the assessment for 1941-42, the assessee claims that Babu Indrachand who is a Karta of the assessee HUF styled ' Kaniram Hazarimull ' is a partner in the firm of Indrachand Hariram of Captaingunj, in his individual capacity and as such income from the share should not be included in the assessment of the family." The reference to the assessee's contention in the AAC's order in respect of the asst. yr. 1940-41 reads as follows :-- "The contention is that the income of Indrachand Kejriwal from the partnership was received by him in his individual capacity and not representing the HUF."
(3.) SO again, the order of the AAC in respect of the asst. yr. 1941-42 states the claim of the assessee to have been that Mr. Indrachand Kejriwal is a partner in the managing agency firm in his individual capacity and that his income from this partnership should not, therefore, be included in the income of the HUF. And lastly, the order of the AAC in respect of the asst. yr. 1942-43 says that the objection advanced on behalf of the assessee was that the partnership income had arisen to Indra Chand individually. Curiously enough, the order of the Tribunal has not been included in the paper book, but we have been supplied With a typed copy of it. It appears from the order that once again the contention was that Indra Chand was a partner of the firm in his individual capacity and if the books of the HUF showed receipt of the income, it was because Indra Chand, after having received it, had given it or passed it on to the HUF. I do not find in the contentions raised before the successive authorities any trace of the argument sought to be advanced by Mr. Gupta. What appears to have been debated before the authorities below was a straight question as to whether Indra Chand was a partner on his own account or whether he was a partner as a representative of the family, but this question was debated and considered not on the footing that the Karta of an HUF could not in law be a partner on the family's behalf and the partnership income derived by the Karta could not in law be the family income. The controversy appears to have been conducted on the basis that in fact Indra Chand did not represent the family in the partnership, but was there in his own personal interest. In those circumstances it does not seem to be in order that the assessee should try to raise a new point which the Tribunal was not asked to consider and to which the case stated does not refer. Dealing with an attempt to raise a new point before them in support of the assessment, the judicial Committee observed in the case of CIT vs. Dewan Krishna Kishore (1941) 9 ITR 695 (JC) as follows : "It is neither convenient, nor conducive to accuracy that new and important points of law should be raised for the first time at their Lordships' Board or that decisions should be given on matters not duly submitted to the High Court." ;