M KANNAPPA NAICKER AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) (a) whether on the facts of this case the assessee firm did succeeded to the business of the individual partners within the meaning of Section 26(2) of the Indian Income-tax Act ? and (b) whether a firm constituted under a registered deed of partnership of firm for the purpose of income-tax merely because while specifying the individual share of the profits and losses the instrument does no specify the shares inter se of the partner firm

(2.) THE facts have been found by the Income-tax Commissioner as follows : (a) THE individual partners were separately carrying on the business of supplying labour to the Madras Port Trust until August 31, 1933 : (b) When the Port Trust invited tenders for the supply of labour from September 1, 1933, the partners of the firm tendered jointly and secured the contract : (c) From September 1, 1933 the partners continued to carry on the same business (supply of labour to the Port Trust) jointly in accordance with the agreement dated September 5, 1933 : (d) Most of the employees of the old business and the goodwill of the individual partners as suppliers of labour are now used for the joint business of the three partners in the same line. From September 1, 1933 the individual partners have not been carrying on the business of supplying labour separately either to the Port Trust or to any other person. THE Commissioner is of the opinion that the facts before stated by him establish that the business carried on by M. K. Naicker Co., is identical with the business carried on by M. K. Naicker Sons and Raju Naicker and Govindarajulu Naicker individually, that it is in continuation of the individual businesses of the partners, that the effect of the joint contract of the partners with the Port Trust is that their separate businesses became amalgamated into one business, that prior to September 1, 1933 the business of supplying labour to the Port Trust consisted of two units, one owned by M. K. Naicker Sons and the other by Raju Naicker and Govindarajulu Naicker, that after 1st September both these units are owned by M. K. Naicker Co., no one having any exclusive ownership of any one unit, that there is thus a transfer of ownership of the separate businesses from the partners concerned to the firm and that this amounts to succession within the meaning of Section 26(2) of the Act; and in support of this opinion he relies upon Messrs. Best Co., v. Commissioner of Income-tax, Madras.