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TMI Blog1954 (3) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... e?" 3. The only point at issue arose in the assessments for the years 1939-40, 1940-41, 1941-42 and 1942-43. The assessment for the year 1939-40 was made on 28th March, 1944. In connection with that assessment, the point was not raised before the Income-tax Officer at all. It was raised for the first time before the Appellate Assistant Commissioner dealing with the appeal against the assessment for the year 1939-40. It was, however, raised before the Income-tax Officer in connection with the assessments for the years 1940-41, 1941-42 and 1942- 43. The point raised by the assessee was not accepted by the Income- tax Officer making the assessment for the year 1940-41. A copy of the Income-tax Officer's order making the assessment for the year 1940-41 is annexure "A" and forms part of the case. The point was decided in favour of the assessee by the Appellate Assistant Commissioner. A copy of the Appellate Assistant Commissioner's order dated 23rd June, 1947, in connection with the appeal for the year 1939-40 is annexure "B" and forms part of the case. 4. The following geneological table will elucidate the facts. Jeshinghbhai Mangaldas (died on 26-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted on 30th November, 1942. Under this partnership deed the shares of the partners, namely, Jeshinghbhai, Manilal and Shantilal were ₹ 0-5-4 each. Prior to this, there was a partnership deed executed on 26th January, 1934. This partnership deed of 1934 does not make any mention of stores business referred to in the partnership deed dated 12th May, 1924. The Ahmedabad firm is the assessee. 6. There was a business at Bhavnagar. Bhavnagar business consisted entirely of advancing money to two spinning and weaving mills and receiving interest on the loans advanced to the mills. A partnership deed in respect of the Bhavnagar business was executed on 20th January, 1941. A copy of the partnership deed is annexure "E" and forms part of the case. According to that partnership deed, the partners were Jeshinghbhai, Mangaldas and Manilal, each having a ₹ 0-5-4 share. The partnership deed recites that the partnership has been in existence since 25th October, 1918. The business at Bhavnagar was also carried on in the name of Seth Jeshinghbhai Ujamshi. It was brought to the notice of the Tribunal that this partnership deed was executed for the purpose of producing it before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent shares. The matter was taken to the High Court which in its judgment dated 19th September, 1949, held that in law common partners can constitute two separate firms in respect of different businesses carried on by them for the purpose of the Indian Income-tax Act. The High Court also held that the question whether there are two firms or only one, is a question of fact. 11. In order to have sufficient material for giving a finding on the aforesaid question, the Tribunal directed the Income-tax Officer to submit a report dealing particularly with the circumstances in which the Ahmedabad and Bhavnagar firms came into existence, how the parties were assessed prior to 1924, how the Bhavnagar firm was originally financed and how the profits of the Bhavnagar firm were remitted to Ahmedabad. A copy of the Tribunal's remand order dated 18th March, 1950, is annexure "F" and forms part of the case. A copy of the Income- tax Officer's remand report is annexure "G" and forms part of the case. In reply to this report an affidavit was filed on behalf of the assessee. It was, however, sworn not by one of the partners but by one Jaishankar, a manager of the firm. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the years 1939-40, 1940-41, 1941- 42, 1942-43, and 1943-44 were made on the footing that the income from the Bhavnagar business belonged to the Ahmedabad firm. Not only that the excess profits tax returns for the first two chargeable accounting periods were also made on the same footing. A letter written by Messrs. Mulla&Mulla on 4th March, 1944, stated, inter alia, as follows: "The abovenamed firm has income in Native States, the income being restricted to interest from the Navjiwan Mills Ltd., of Kalol in Baroda State and from the New Jehangir Vakil Mills Ltd., of Bhavnagar." A copy of the letter is annexure "J" and forms part of the case, Later on, it was pointed out to the Income-tax Officer that the income- tax and excess profits tax returns and the above admission were made under some misapprehension. (g) The names of the firms were one and the same. 14. Sir Jamshedji Kanga on behalf of the Ahmedabad firm stated that the test to be applied for the purpose of determining whether the two firms constituted one and the same firm or were separate entities was whether their business interlaced and interlocked. According to him, if the businesses interloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate businesses, and we emphasized the fact that the question whether the business was one or separate was a question of fact which could only be determined by the Tribunal after taking into consideration all the relevant materials. This matter having gone back to the Tribunal the Tribunal has considered all the materials and has come to the conclusion that the two firms at Bhavnagar and at Ahmedabad constitute only one business. Now, if this was a finding of fact arrived at pursuant to our directions, then the finding would be binding upon, us, but the finding has been arrived at, not on the appreciation of evidence or on a consideration of materials placed before it, but it has come to the conclusion, as already indicated, with respect to the Tribunal, on a complete misapprehension as to the law laid down in the decision just referred to. The view taken by the Tribunal is that no question of there being two business can arise if the owner of the two businesses is the same. Now, that was the very question that arose before us and on that question we disagreed with the Tribunal. We held that even if the owners are the same, even so, there can be two separate firms for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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