9911796707
TMI Blog1936 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer of Meerut that the assessee's one third share amounted to ₹ 50,820, which sum was arrived at in the following way. Rs. Net loss of the Calcutta firm 5,434 Interest to partners 3,33,278 Gross loss of the Calcutta firm 3,38,713 One third share of the assessee in the gross loss under the head of interest 1,11,094 Interest actually paid to the assessee 1,61,913 Net share of the assessee 50,820 The assessee's income from property at Khurja amounted to ₹ 360 and the Income tax Officer added this amount to the sum of ₹ 50,820 and levied income-tax upon the assessee in the amount of ₹ 51,180. He over-ruled the assessee's objection that the assessee's share in the Calcutta firm amounting to ₹ 50,820 was not liable to assessment. The assessee applied to the Assistant Commissioner of Income tax and in his grounds of appeal he also raised a plea of jurisdiction; but the appeal was dismissed. Thereafter the assessee applied to the Income tax Commissioner for a reference to be made to this Court under Sec. 66(2) of the Act. The Income tax Commissioner has accordingly stated a case and has referred three questions of law to this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal place of business is situate. "Clause (2) reads:-In all other cases an assessee shall be assessed by the Income tax Officer of the area in which he resides". In the view which I take, however, upon this question of jurisdiction it will not be necessary to consider whether the assessee was "carrying on business" at Calcutta within the meaning of clause (1) of Sec. 64. Clause (3) of that section reads as follows:-"Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner or where the question is between places in more provinces than one by the Commissioners concerned, or if they are not in agreement, by the Central Board of Revenue; provided that before any such question is determined the assessee shall have had an opportunity of representing his views." The provisions of Sec. 64 are concerned with the assessment which an Income-tax Officer makes and clause (3) appears to me to contemplate a question of jurisdiction arising at the time of such assessment and not at any future stage. If the Income-tax Officer has any doubt as regards his jurisdiction or if he is moved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment proceedings. In the present case, however, no question of jurisdiction arose at the time of assessment inasmuch as the assessee did not object to being assessed at Khurja and the Income-tax Officer himself had apparently no doubt in his own mind as regards his jurisdiction and he was therefore under no necessity to refer the matter to the Commissioner of Income- tax. In my opinion the provisions of clause (3) of Sec. 64 were not intended to apply to any stage after the making of the assessment order. If the assessee had no right to object in the matter of jurisdiction after the assessment order had been made, it has to be considered whether this is a "question of law arising out of" the appellate order within the meaning of clause (2) of Sec. 66. It cannot be denied that the question of jurisdiction was raised in appeal before the Assistant Commissioner inasmuch as one of the grounds of appeal was that the Additional Income-tax Officer had no jurisdiction to make the assessment: and thereafter the assessee moved the Commissioner to state a case for the decision of the High Court on the ground that this point-among others-had been decided against him by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns in clause (2) would have no meaning. In any case, it is difficult to see how the High Court of this province could decide a question of jurisdiction affecting the Income-tax authorities of Calcutta unless the two Commissioners had agreed to abide by the decision of this Court. I can quite understand that at the time of assessment, if the Income tax Commissioner of a particular province were moved by an Income tax Officer under him on the question of jurisdiction in respect of two or more districts in the province and if he were himself in doubt, he could state a case under Sec. 66(1) to the High Court of his province, but I am inclined to doubt whether it would be in accordance with the spirit and scheme of the Act that even this should be done after the assessment has been made. Be this as it may, I am clearly of opinion that the reference in the present case was incompetent under Sec. 66(2). It is contended by learned counsel for the department that in any case, if there was a defect in jurisdiction it was cured by clause (4) of Sec. 64. That clause reads as follows: "Notwithstanding anything contained in this section, every Income tax Officer shall have all the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich have been assessed to income tax as is proportionate to his share in the firm at the time of assessment". Thus it is clear that a partner's share in the profits of a firm is income and must be computed as such. If the profits of the firm have been assessed to income tax the partner's proportionate share therein will thereafter be exempted. Learned counsel for the assessee argues that "to assess to income-tax" means "to calculate the income-tax payable by the assessee". I am unable to accept this contention. It seems to me that the only meaning which the words can bear is "to ascertain or calculate the income-tax payable". Since the firm at Calcutta suffered a loss, it was not assessed to income tax within the meaning of Sec. 14(2)(b) and therefore the assessee is not entitled to exemption under that section. In my opinion the amount of ₹ 51,180 was correctly treated as the assessee's share in the Calcutta firm for the assessment year in dispute and it was not exempt from income-tax under Sec. 14(2)(b). BAJPAI, J.--I agree. I wish to add a few words generally on the three questions referred to us. The entire scheme of the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
