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TMI Blog1976 (8) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... treet, under registration certificate No. AT/3755A issued under the said Act and employed amongst others in the manufacture of mild steel wire and galvanised wire. In or about 1960, the appellants transferred machineries on diverse dates worth about Rs. 79,318.11 from the said Wire Industries to the said Wire Products, and the Commercial Tax Officer concerned treated the said transfers as sales and by his order in annexure C dated 29th March, 1963, assessed them to tax. It is an admitted fact that the appellants filed a return showing the gross turnover at Rs. 6,21,821.32. Thereafter, at the assessment stage, they filed a revised return for the month of December, 1960, reducing the gross turnover from Rs. 1,87,074.35 to Rs. 1,08,336.34 claiming that machinery worth Rs. 72,478.61 and Rs. 6,830.50, which were transferred to the said Wire Products is an allied concern of the partners of the said Wire Industies. The relevant bills Nos. 73/60 and 74/60 were wrongly shown as sales in the original return and contending further that those were mere transfers and not sales. It was also contended that those transfers were shown as sales by mistake. It is also an admitted fact that taking th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Commercial Taxes (Revision Case No. 802 of 1964-65) under section 20(3) of the said Act and by his order dated 29th November, 1967, the said Additional Commissioner rejected the petition and confirmed the appellate order holding, inter alia, that in the absence of any deed of partnership and in view of the conduct of the appellants and their treatment to the partnership, the conclusion that the partnerships were distinct and separate would not be justified. It may be mentioned that in the determination under consideration it has, of course, been rightly observed that under the general principles of law one cannot sell to oneself. Thereafter, on 11th April, 1968, Civil Rule No. 4279(W) of 1968 was obtained by the appellants. It is also an admitted fact that the respondents in the said rule have not filed any affidavit-in-opposition and, as such, there has been no return to the rule. The rule came up for hearing before the learned Judge in the trial court on 15th May, 1973, and, unfortunately, at the time of the hearing on that day, nobody on behalf of the petitioners was present. We are sure that because of the said fact, the learned Judge in the trial court was not appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s carried on by a Hindu undivided family of which Tekchand, who had signed for it, was the karta. It was also conceded that Mangatrai Ganpatram was an individual. The application for registration was signed by the same five individuals who had signed the deed of partnership. Finding that Dulichand Laxminarayan constituted under the aforesaid deed of partnership dated 17th February, 1947, consisted of three firms, one Hindu undivided family business and one individual and taking the view that a firm or a Hindu undivided family could not as such enter into a partnership with other firms or individuals, the Income-tax Officer held that the said Dulichand Laxminarayan could not be registered as a firm under section 26A and, accordingly, on 26th February, 1950, he rejected the application. On appeal the Appellate Assistant Commissioner held that when a firm entered into a partnership with another firm the result in-law was that all the partners of each of the smaller firms became partners of the bigger firm and, therefore, there was no legal flaw in the constitution of the bigger firm of Dulichand Laxminarayan. He, however, took the view that, as the application for registration had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, it has been held that a firm as such is not entitled to enter into partnership with another firm or individual. In making such decision, in the earlier decision of the Supreme Court, Jabalpur Ice Manufacturing Association v. Commissioner of Income-tax, Madhya Pradesh[1955] 27 I.T.R. 88., was relied on and followed, apart from following the decision of the Privy Council in the case of Bhagwanji Morarji Goculdas v. Alembic Chemical Works Co. Ltd.A.I.R. 1948 P.C. 100., for the proposition that Indian law has not given legal personality to a firm apart from the partners. A reference was also made to the case of Commissioner of Income-tax, West Bengal v. A. W. Figgies Co.[1953] 24 I.T.R. 405 (S.C.)., which also supports the said view. Mr. Sen then relied on the Bench decision of the Madras High Court in the case of Mahendra Kumar Ishwarlal & Co. v. State of Madras[1968] 21 S.T.C. 72. In that case, on the question whether transfer of goods from one firm to another would constitute sale and, consequently, liable to sales tax, it has been held: "To constitute a 'sale' within the definition of that word in the Central Sales Tax Act, 1956, there must be two different persons, in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Ishwarlal & Co. v. State of Madras[1968] 21 S.T.C. 72. applies with all its force to the facts and circumstances of the case. In that case, the petitioners, Mahendra Kumar Ishwarlal and Company, a firm dealing with jaggery and foodgrains was composed of four partners. Those partners were also partners of another firm known as "Chunilal Bhagavandas and Company". In the connected year of assessment, the first named firm claimed to have transferred to the said firm at Bombay, jaggery worth about Rs. 4,40,675.87. The department took the view that such transfer of jaggery represented a sale by the first named firm to the said Bombay firm and should be assessed to Central sales tax. In that case, it was also contended by the assessee that since the partners in both the firms were identical, in spite of the differences in their shares in the business, there could not be any sale at all, because one person cannot sell to himself. Considering the cases of State of Madras v. Sri Murugan Electricals, MadrasT.C. No. 40 of 1960 (Madras High Court)., Raju Chettiar & Bros. v. State of Madras[1955] 6 S.T.C. 131. and State of Punjab v. Jullundur Vegetables Syndicate[1966] 17 S.T.C. 326 (S.C.) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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