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TMI Blog1975 (10) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... me two partners, as the appellant's firm though with differing profit sharing ratios. The assessing authority felt that the turnovers of both the appellant firm viz. Madras Can Factory and Madras Drum Factory both at the same address are one and the same and that the respective turnovers should be aggregated in appellant's name. It is this aggregation which is under dispute before us. When the assessing authority proposed to make the aggregation, the appellant objected to the same on the ground that it was not open to the authorities to combine two different firms with two different names and establishments. The appellant's objections were found unacceptable. In appeal, the AAC was satisfied that the partners of both these concerns were the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Drum Factory as its Manager. Thiruvalargal Madras Drum Factory, is said to have a depot at Tiruchirapalli. The brothers are interested in some other concerns also. For example, in the business in the name of Lite Metal Industries, both these brothers are said to be partners. They also have business in Erode in the name of Thiruvalargal Erode Tin Factory in which Thiru C.K.Rajaram is said to be interested as proprietor. It is common ground that the profit sharing ratios between. Thiru C.K. Venkataram and C.K. Rajaram are not identical. In Thiruvalargi Madras Can Factory, their shares are equal while in Madras Drum Factory, the ratio is 45 per cent and 55 per cent. It is the stand of the authorities that the very fact that these two concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his view, that it was considered that the firm not being a legal entity cannot sell or transfer on its own and that it is the partners who effect the transfers in the name of the firm. It was therefore considered that there could be no question of 'sale' between two such firms within the meaning of sale of Goods Act. The Madras High Court, in the said case, itself, observed that the decision is based upon general laws which govern the incidence of transfer and sale. For purpose of transfer, there should be two different persons without introducing the legal fiction of an 'assessable' entity for the purpose of taxing law or a ground entity of the 'firm' under the Indian Partnership Act. In other words, the question that was relevant in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convenient mode of describing the partners collectively, but there is no bar under Indian Partnership Act against the existence of two separate firms with the same two partners. Even general law sometimes when it is convenient to do so, recognised to separate identity of the 'firm' as a group entity by itself as for example in Order 30, Rule 1 of the CPC. Indian IT Act, 1922 construes a firm as a separate taxable entity though the firm has the same meaning under the Partnership Law. The question that specifically arises in this case had come before the Bombay High Court in the case of Feshinghbhai Ujamshi vs. CIT Bombay (1955) 28 ITR 454. The High Court after reminding the matter on facts observed. "………The view taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect test in order to determine whether the two businesses are the same or different". Even in appellant's case no interlacing or interlocking are established. On the contrary, there are quite a number of features in appellant's favour on facts. The test to be applied for sales tax law does not appear to be different. The Tamil Nadu General Sales Tax Act also recognises 'Firm' as a separate taxable entity in s. 2(g)(i) when it made an inclusive definition of dealer as 'Local authority company or HUF, firm or other association of persons, which carries on such business.' Separate provisions have also been made for assessment on a firm under s. 19 of the Act and for assessment of a dissolved firm under s. 19A. Relevant rules regarding juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that there has been any camouflage or anything sham about the claim that there are two separate entities. They have been led by the concept of transfer under the General Law as explained by the Madras High Court in 21 STC 72 is pointed out; the issue therein was different. Under the circumstances, we do not feel that the authorities were justified in including the turnover of Madras Drum Factory in the present appellant's case. We direct the elimination of such turnover. We would like to make it clear that out order does not preclude the authorities from proceeding to make an assessment on Madras Drum Factory as had been hitherto done. 5. In the result, the appeal is allowed. The appellant is eligible for a relief on a turnover of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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