TaxTMI 
TaxTMI 
1956 (2) TMI 2
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....-5-0 and Rs. 13,005-5-0. During the year 1944-1945 it sustained a loss of Rs. 15,771, and adding it to the sum of Rs. 37,800 which was the standard profits for the business, the Excess Profits Tax Officer determined the deficiency of profits for the year at Rs. 53,571. Section 7 of the Excess Profits Tax Act, hereinafter referred to as the Act, provides that when there is a deficiency of profits in any chargeable accounting period in any business, the profits of that business during the previous year shall be deemed to be reduced eo extanti, and that the relief necessary to give effect to the reduction shall be given by repayment of the tax paid or otherwise. Acting under this section, the Excess Profits Tax Officer passed an order on 23rd December, 1946, whereby after setting off the profits of the firm for the years ending 1943 and 1944 against the deficiency of profits during the year ending 1945, he directed a refund of Rs. 23,028-10-0 which had been paid by the appellant as excess profits tax for those years. It should be mentioned that at the commencement of the assessment year 1944-45 there was a partition in the joint family of which Mohanlal was the erstwhile karta, as a....
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....940, was concerned. He further directed that Rs. 11,514-5-0 which had been refunded to it should be collected. The appellant thereupon moved the High Court of Nagpur under article 226 for a writ of certiorari quashing the order of the Commissioner dated 15th March, 1950, and for a writ of prohibition restraining the authorities from collecting Rs. 11,514-5-0 under that order. By their judgment dated 22nd August, 1950, the learned Judges agreed with the Commissioner that by reason of the partition there was a change in the persons who carried on the business, and that the order dated 23rd December, 1946, was contrary to section 8(1) of the Act. They also held that as the mistake appeared on the face of the record, the Commissioner had jurisdiction under section 20 of the Act to pass the order which he did. In the result, the writs were refused. Against this judgment, the appellant prefers this appeal by special leave. Two questions have been raised for our determination in this appeal : (1) whether by reason of the partition of the joint family and the reconstitution of the firm under the deed dated 17th October, 1944, there was a change in the persons carrying on business withi....
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....on 23rd August, 1940, Chhotelal and Bansilal could not be held by reason of that fact alone, to have become partners therein. It is argued that when that firm was constituted on 23rd August, 1940, the persons who entered into the contract of partnership were not merely Mohanlal as karta of the joint family but also Chhotelal and Bansilal in their individual capacity, and that therefore they became partners under the ordinary partnership law. But the registration certificate of the firm while showing "Bhagat Ram Mohanlal, Hindu undivided family" as a partner makes no mention of either Chhotelal or Bansilal as partners. The contention that they also became in their individual capacity partners appears therefore to be an afterthought, and is opposed to the findings of the learned Judges of the High Court. This is sufficient, without more, to dispose of this contention. But even apart from this, it is difficult to visualise the situation which the appellant contends for, of a Hindu joint family entering into a partnership with strangers through its karta and the junior members of the family also becoming at the same time its partners in their personal capacity. In Lachhman Das v. Com....
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.... Gajadhar and "Bhagat Ram Mohanlal, Hindu undivided family" consisting of three coparceners, Mohanlal, Chhotelal and Bansilal, it being immaterial for the present purpose whether the karta of the family was only Mohanlal, or all the three of them. Then, the family became divided in 1944, and the result of it was that one of the three persons who were partners in the old firm, "Bhagat Ram Mohanlal" ceased to exist. On 17th October, 1944, the two surviving partners of the old firm, Richpal and Gajadhar, entered into a contract of partnership with Mohanlal, Chhotelal and Bansilal. The erstwhile joint family of which they were members not being a partner in the new firm, it having ceased to exist by reason of the partition, there was, having regard to the definition in section 2(17) of the Act, a change, in the persons who carried on the business. That was the view taken in Shanmugavel Nadar and Sons v. Commissioner of Income-tax, and we agree with it. Whether the question is considered on the principles of Hindu law or on the provisions of the Excess Profits Tax Act, there was a change in the personnel of the firm on 17th October, 1944, and the matter falls within section 8(1) of the ....