TaxTMI 
TaxTMI 
1963 (4) TMI 62
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....sed in the name of a mill, namely, Motilal Padampat Sugar Mill of which the aforesaid two persons were the owners. Later on, by a resolution of the mill company, the farms were separated from the mill and the lands in their entirely were cultivated by the concern. As nothing now depends upon the distinction between the lands purchased in the name of the mill and those acquired otherwise, we shall ignore the distinction for the purpose of these cases. The assessee claimed that the concern was a co-ownership concern belonging to the two persons above-named in the shares already indicated, and as they were residents of Uttar Pradesh at a very long distance from the farms in Champaran, they appointed one S. K. Kanodia as common manager for facility of cultivation and management. This common manager looked after and managed the agricultural operations during the years in question. The further case of the assessee was that the lands were undivided between the two co-owners and the total net profits arising out of the joint cultivation were divided between the two co-owners. On these statements the assessee pleaded that section 13 of the Act applied and the common manager should have b....
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....n this footing the High Court answered the question against the assessee. The assessee then moved this court for special leave and having obtained such leave has brought the present appeals to this court from the decision of the High Court dated September 29, 1959. We may now refer to some of the provisions of the Act which bear upon the question before us. Section 2 of the Act is the definition section. According to the definition given in that section "agricultural income " means, inter alia, any income derived from land which was used for agricultural purposes. It was not disputed before us that the income which the assessee in these cases derived was from land which was used for agricultural purposes, namely, the cultivation of sugarcane, etc. The definition section further stated that the word " firm " had the same meaning as in the Indian Partnership Act, 1932, and the word " person " meant any individual, association of individuals, owning or holding property for himself or for any other or partly for his own benefit and partly for another either as owner, trustee, receiver, common manager, administrator or executor or in any capacity recognised by law and included an ....
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....f the sums payable as agricultural income-tax by each person on the agricultural income derived from such land and received by him shall be assessed on the common manager in respect of the agricultural income-tax so payable by each such person and the common manager shall be liable to pay the same. We have already stated that the learned Solicitor-General has not now argued before us that section 13 will apply in the case of a partnership firm. He has, however, very strongly argued that section 13 in terms will apply if the assessee in the present cases is a co-ownership concern (as distinguished from a partnership firm) and the common manager thereof must be assessed in respect of the aggregate of the sums payable as agricultural income-tax by each such co-owner. Mr. S. P. Varma appearing for the respondentState of Bihar-has indeed conceded that if the assessee in the present cases is a co-ownership concern, then section 13 will apply and the question referred to the High Court must be answered in favour of the assessee. He has, however, argued that the High Court was right in holding that the assessee was a partnership firm and on that footing answering the question against the a....
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....n the meaning of the Indian Partnership Act of 1932, is a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The appointment of Kanodia by the two co-owners acting together is consistent with either view and does not clinch the issue in favour of a partnership. The High Court appears to have taken the appointment of Kanodia by the two co-owners as a circumstance establishing a partnership. The High Court has further pointed out that the two co-owners lived in Uttar Pradesh and belonged to two different families. We do not see how that circumstance gives any indication in law of a partnership. As to the division of the profits and losses, the finding of the Deputy Commissioner of Agricultural Income-tax was that the two proprietors had no definite shares in the agricultural lands, by which he must have meant that the lands of the six farms had not been partitioned amongst the two co-owners by metes and bounds. The cultivation was made jointly on behalf of the two co-owners by the common manager and the profits arising therefrom were distributed to them in proportion of their respective shares of Rs. 0-4-0 and ....
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....hat on behalf of the assessee the question was not properly framed. The assessee's contention all along was that it was a co-ownership concern and not a partnership, but in framing the question the word "partners" was used. We do not think that a mistake in the framing of the question, which was later corrected by the High Court, will change the real position in law. As to the returns which were filed they were not printed in the paper-book. Learned counsel for the respondent gave us copies of the returns. These returns showed that in all the three years the assessee indicated its status as a co-ownership concern and the name of the assessee was shown as the manager, Champaran Cane Concern or common manager, Champaran Cane Concern. The body of the return contained four alternatives as to whether the return was being submitted by an individual, firm, a joint family or an association of individuals. The intention of putting four alternatives in the printed form of the return is to cut out the alternatives which do not apply. In the cases before us the alternatives relating to individual, family and association of individuals were cut out and the alternative "firm" remained. The Hi....