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Issues Involved:
1. Whether the Tribunal was justified in law in holding that the assessee carried on business or profession in Goa, Daman and Diu before the appointed day, December 20, 1961. 2. Whether the Tribunal was justified in law in holding that the assessee was entitled to the benefits of the concession contained in the Dadra and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964. Issue-wise Detailed Analysis: Issue 1: Assessee's Business or Profession Before Appointed Day The first issue pertains to whether the assessee carried on business or profession in Goa, Daman, and Diu before December 20, 1961. The assessee is a partnership firm registered under the Income-tax Act for the assessment year 1965-66 onwards. The Tribunal's decision was based on the existence and activities of "M/s. Rao Family Society," a joint family system that included two brothers and their families. The Tribunal concluded that the sons of R. B. Rao and Y. B. Rao were participating in the business of M/s. Rao Family Society not as employees but as co-owners, fulfilling the agency element required for a partnership. However, the court noted that M/s. Rao Family Society could not be considered a partnership under Indian law. The body constituting M/s. Rao Family Society did not originate from any agreement, express or implied, but was a joint family system recognized under the Portuguese Civil Code and the Decree of 1880 applicable in Goa. The public deed dated July 26, 1959, confirmed the existence of the joint family rather than creating a new relationship. Thus, the body carrying on the business on the appointed day could not be considered a partnership firm. Issue 2: Entitlement to Taxation Concessions The second issue involves whether the assessee was entitled to the benefits of the Taxation Concessions Order, 1964. The Income-tax Officer denied the benefit on the grounds that the partnership firm, constituted by the deed dated March 13, 1964, was not in existence before the appointed day and did not carry on business on or before that date in Goa. The Appellate Assistant Commissioner initially granted the concession, believing that the same individuals who were part of M/s. Rao Family Society continued the business as partners of the new firm. The Tribunal supported this view, stating that the sons of R. B. Rao and Y. B. Rao were involved in the business as co-owners and not merely as employees. The Tribunal likened M/s. Rao Family Society to a partnership under Indian law. However, the court disagreed, emphasizing that the joint family system did not constitute a partnership as it did not originate from an agreement. Moreover, the parties to the public deed were different from those in the partnership deed dated March 13, 1964. The sons of the two brothers were not parties to the public deed but were included in the partnership deed, while the wives of the brothers were parties to the public deed but not to the partnership deed. Therefore, even if M/s. Rao Family Society were considered a partnership, it would not be the same as the assessee-firm. The court also rejected the argument that the assessee-firm was a continuation of M/s. Rao Family Society with some partners retiring, as the deed of dissolution indicated a complete division of assets, not merely the retirement of some partners. Conclusion: Both questions were answered in the negative, against the assessee. The court held that M/s. Rao Family Society did not constitute a partnership firm under Indian law and that the assessee-firm was not the same entity as the body carrying on business on the appointed day. Consequently, the assessee was not entitled to the benefits of the Taxation Concessions Order, 1964. The assessee was ordered to pay the costs of the references to the Commissioner.
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