SIR SUNDAR SINGH MAJITHIA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS is an appeal by the assessees from a judgment of the High Court at Allahabad on a reference made under Sub-section (2) of Section 66 of the Indian Income-tax Act, 1922. The question referred arises out of an assessment made for the year 1932-3 on the profits of a business carried on under the style of "The Saraiyar Sugar Factory" at Saraiyar in the District of Gorakhpur in the United Provinces. The year of account is the year ending September 30, 1931, in accordance with the accounting practice of the assessees. The matter of substance in the present dispute is whether the assessment should be made upon the footing that the business belonged to a Hindu undivided family or upon the footing that it belonged to a firm of which the father, mother and three sons were partners on the terms of a written instrument dated February 12, 1933. The family are Sher Gill Jats of the Amritsar District of the Punjab. It is not disputed that they form a Hindu undivided family, but with them the general Hindu law is superseded by custom which provides special rules upon many points of family law. The present appeal was brought by Sir Sundar Singh Majithia as father and head of the family, but he has since died and the sons are now the appellants.

(2.) THE written instrument dated February 12, 1933, describes itself as an "agreement of partnership" and the parties to it are the father (first party), the mother (second party), and the three sons (third, fourth and fifth parties).

(3.) UPON the terms of this agreement it is to be observed that it does not itself purport to effect any partition of family property or to be a transfer of any property movable or immovable by the father to the other parties. It recites that the father has given a; share to the other parties. So, too, it does not state that the partnership came into existence on the date of the agreement, February 12, 1933, but that the parties have already entered into a partnership. It would appear indeed to have been the assessees' case that the oral partition and commencement of the firm took place in September, 1931, and that certain entries were made in the books at that time.