- (1.) THIS is a petition by Bansilal on behalf of Shri Ekling Cotton Ginning and pressing Factory, Gangapur, under Sub-section 2 of Section 66 of the Indian income Tax Act.
(2.) THE material facts are these. The asses-see is a partnership firm carrying on the business of ginning and pressing of cotton at Gangapur, district Bhilwara. The income-tax Officer, Udaipur, (Ward A) by his order dated the 31st July, 1953. assessed the firm to income-tax for the assessment year 1951-52, the relevant accounting period being the year ending on the 30th June, 1950. The assesses had made an application to the Income-tax Officer for registration of the firm and submitted a deed of partnership dated the 12th September, 1950, along with certain other documents executed between the partners in sup-port of the application. The deed showed that the firm as on 12-9-1940 consisted of nine partners including Kashiram. father of the petitioner Bansilal, and Gauri-shanker and shankerlal and six others. Their shares were defined in the deed. Kashiram had died in 1942. It then transpired that Gaurishan-ker who held four annas nine pies share in the concern sold two annas share thereout to Shanker-lal on the 19th february, 1949, who until this transfer he]d only four annas share. Shankerlal who had thus acquired six annas share thereafter sold his entire six annas share by a registered document dated the 26th April, 1949 to Bansilal and his sons for a sum of Rs. 85,000/ -. The sale-deed was executed in favour of bansilal and his two sons Ramnarain and Ram-rai, who it may be mentioned, were stated to be minors under the guardianship of their father Bansilal. It appears that both Bansilal (in his own capacity and as guardian of his minor sons) end shankerlal sent letters to the managing partner of the factory intimating the fact of this sale and the other partners agreed to the reconstitution of the firm under a resolution recorded in the minute book on 4-5-1949 wherein it was stated that the remaining partners had no objection to Bansilal, and Ramrai and Ramnarain sons of Bansilal, being accepted as holders of Shanker-lal's six annas share in the firm. The shares of Bansilal and his sons inter se were, however, not defined. The income-tax Officer rejected the application for the registration of the firm chiefly on the ground that the shares field by Bansilal and Ramrai (the name of ramnarain appears to have been omitted by an oversight) were not defined. The firm was accordingly assessed as an unregistered firm. The assessee then went in appeal to the Appellate Assistant Commissioner who dismissed the appeal. The ground which prevailed with the Appellate Assistant Commissioner was that there was no instrument of partnership among the various persons who were the actual partners during the relevant accounting period and that the firm had undergone various changes as compared with the position set forth in the partnership instrument of 1940. Thereafter the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal also dismissed the appeal on the short ground that the individual shares of all the persons who were partners during the relevant year of accounting had not been specified either in the instrument of partnership or the later agreements recorded between them and that such failure to specify the shares was fatal to the assessee's application. This order is dated the 10th October. 1955. The petitioner then moved an application before the Tribunal under Section 35 of the Income-tax Act in which he prayed that the Tribunal was mistaken in supposing that Bansilal, Ramrai and Ramnarain had become partners in the firm and that in fact only Bansilal had become a partner as Karta of his family including himself and his sons Ramrai and Ramnarain, and prayed for registration accordingly. This application was summarily rejected. Thereafter the applicant moved an application before the Tribunal under Section 66 (1) of the Income-tax Act praying for the case being referred to this Court on certain points of law which were alleged to arise out of its order. After pointing out that the individual shares of certain three persons who had cumulatively purchased the share of an outgoing partner had not been specified either in any instrument of partnership or in any of the later agreements and that this position was not being challenged up to date, the learned members proceeded to observe as follows :-- "the only contention raised, is that these persons had become partners not in their individual capacity but as representatives of a joint Hindu family of which they were members. Such a contention does not appear to have been mooted before she authorities below nor was it mentioned in the grounds of appeal before us. The Tribunal has, therefore, said nothing in its order in that respect. No question of law for reference to the High Court can accordingly be said to arise out of the Tribunal's order. " The application was in this view dismissed. The petitioner has now come up before us with a prayer that we should require the tribunal to state a case on certain alleged questions of law, which have been mentioned in the application. The questions proposed are these : "1. Whether the purchase of share (from Shri Shankerlal the outgoing partner) by Shri Bansilal Ramrai and Bamnarain was in their individual capacity or on behalf of the Hindu undivided family? 2. Was Shri Bansilai a partner in the asses-see firm in the relevant year in the capacity of Karta of the Hindu undivided family? 3. Did Ramrai and Ramnarain become partners of the asseasee firm or they were merely interested in it through the Karta, Shri Bansilai? 4. Was specification of individual shares of Shri Ramrai and Ramnarain necessary under the provisions of Section 26-A of the Indian Income Tax act. 1922. under the circumstances of the case? 5. Is the firm entitled to registration under Section 26-A of the Indian income Tax Act, 1932, for the relevant year"?
(3.) NOW before we proceed to deal with the arguments raised before us, we should like to say that we find it rather difficult to make any sense out of question No. 1 as worded by the applicant, and we are unable to say what meaning it is precisely intended to convey. we also consider that questions Nos. 4 and 5 are a repetition of each other: Further, questions Nos. 1 to 3 appear to us to be substantially questions of fact, rather than of law. Be that as it may, the main point which, to our mind, the petitioner seeks to raise in his present application is that Bansilai had purchased Shankerlal's six annas share not in his individual capacity but as a Karta Of a joint Hindu family consisting of himself and his sons and consequently it was, according to the petitioner, unnecessary in law to specify their shares inter se Now so far as this aspect of the matter is concerned, the learned members of the Tribunal have definitely stated in their order dated the 14th March. 1956, that this point was never raised by the petitioner before them in appeal nor was it raised before the subordinate income-tax authorities. The learned members further went on to indicate that had that question been raised before them, they Would have dealt with it. In this state of affairs, we have no hesitation in holding that the question that Bansilai had purchased Shankerlal's six annas share as Karta of a joint Hindu family and that consequently any specification of shares between them inter se was not called for -- is scarcely a question which arises out of their order dated 10-10-55. The position clearly is that this particular aspect was not raised before the Tribunal in appeal so that the tribunal had no occasion to apply its mind to this Question. Under the circumstances, we are disposed to agree with the Tribunal that this question could not be allowed to be raised for the first time in an application under section 66 (1), and are clearly of opinion that it is not a matter which may fairly or properly be said to emerge out of the order passed by the Tribunal disposing of the petitioner's appeal under Section 33 of the Act. The mere circumstance that this question was subsequent to the order passed on appeal sought to be raised by means of an application made under Section 35 of the Act does not and cannot, in our opinion, change the real position.;