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TMI Blog1969 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... apacity. As regards the branch business at Farrukhabad, his wife, Chameli Devi, and minor son, Gopal Das, were substituted for Gur Bux Rai. This partial partition was followed by complete partition on June 1, 1943. When the Excess Profits Tax Officer took up assessments for the three chargeable accounting periods, he took the view that the main purpose of the partial partition was to avoid excess profits tax liability. He, therefore issued a notice to the assessee-firm calling upon it to show cause why necessary adjustment should not be made under section 10A of the Act. The assessee replied that the partition in the family of Gur Bux Rai was genuine ; and section 10A could not be invoked. This objection was overruled by the Excess Profits Tax Officer. That decision was upheld in appeal by the Appellate Tribunal. The assessee-firm applied for a reference to the court. Those applications were dismissed by the Appellate Tribunal. But upon applications under sections 66(2) of the Indian Income-tax Act, 1922, this court directed the Appellate Tribunal to draw up a statement of the case and refer to this court the question arising out of section 10A of the Act. In pursuance of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The family carried on business at Banaras in money-lending and Banaras brocade under the name and style of Sohan Pathak Sons. In the assessment relating to the chargeable accounting period ending on October 8, 1943, the appellants alleged that there was a partial partition among the members of the family on July 16, 1943, whereby the Banaras brocade business was divided in equal shares among the four branches, and that on the next day the adult members of the family formed two partnerships admitting the minors to the benefits thereof. Thereafter the business was carried on in Banaras brocade under the respective firm names, Sohan Pathak Girdhar Pathak and G. N. Pathak Co. The appellants claimed that the family as such ceased to do business in Banaras brocade after October 16, 1943. The Excess Profits Tax Officer took action under section 10A of the Act. In dealing with the applicability of section 10A of the Act to the case their Lordships observed on pages 399 and 400 thus : "The real and substantial question in the appeals is whether in view of the finding of fact that the old family business was wound up, its assets and liabilities having been actually distributed amon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proviso to section 5 of the Act. Consequently section 10A was not attracted. In the present case there is no question of exemption under the third proviso to section 5. Mr. Brijlal Gupta also relied upon section 8 of the Act. Sub-section (1) of section 8 states. "As from the date of any change in the persons carrying on a business, the business shall, subject to the provisions of this section, be deemed for all the purposes of this Act except for the purposes of determining the amount of the statutory percentage to have been discontinued, and a new business to have been commenced." Mr. Brijlal Gupta urged that, in view of the partition in the family of Gur Bux Rai, the case fully falls under sub-section (1) of section 8 of the Act. We have seen that, although there was an alteration in the constitution of the firm working at Farrukhabad, there was hardly any change in the constitution of the firm working at Kanpur. The only change there was that formerly Gur Bux Rai represented his undivided Hindu family, whereas after July, 1942, he was a partner in the firm in his individual capacity. But at both the stages Gur Bux Rai and Har Bux Rai were the partners of the firm. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions designed to avoid or reduce liability to excess profits tax. The provision of section 8 is of a general nature, whereas the provision contained in section 10A of the Act is for a special purpose. It is possible to take the view that the special provision contained in section 10A overrides the general provision contained in section 8 of the Act. In view of all these considerations, the assessee can derive little assistance from section 8 of the Act. The appellate order of the Tribunal is dated February 14, 1952. The Tribunal concluded thus : "In our opinion there being no other reason the Excess Profits Tax Officer was right in holding that the main purpose was to avoid the excess profits tax liability." We must accept this finding recorded by the Tribunal. Mr. Brijlal Gupta pointed out that in addition to the partial partition of July, 1942, there was also a total partition in June, 1943. The Tribunal was fully aware of these two transactions. The Tribunal must have recorded its ultimate finding with reference to both these transactions. We, therefore, take it that when the Tribunal concluded that the main purpose was to avoid the excess profits tax liability, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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