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TMI Blog1960 (2) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed to income-tax in the status of an association of persons. One of the lines of business of the family was timber, and it was common ground that on the profits of that business the family was assessed to income-tax under the 1918 Act. In 1920 Gnanadhikam, on behalf of the family, entered into a partnership with Arunachalam to carry on the business of contracts, mainly contracts with the South Indian Railway Company obtained in the name of Arunachalam. The family was to finance the business, and, in addition to the interest on the sums advanced to the partnership, the family was entitled to a third share of the profits. On the share income of these profits also the family was assessed to tax as an association of persons under the 1918 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on at present in the name of A.S.G. Lourdusami Pillai, in railway, Government and other contracts, gravel and jelly contracts, etc. In respect thereof, a deed of partnership has been drawn up between the parties of the first, third and fourth parts herein. The said parties shall share the net profits or losses arising therefrom in equal portions, in accordance with the terms or conditions of the said deed of partnership." Paragraph 8 of annexure "A" provided that Sandanasami should be entitled to the benefits of the contracts that stood in his name. Apparently those contracts were not treated as coming within the scope of the business the family conducted, for which provision was already made in paragraph 6. In the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs recorded in the order on appeal out of which arose the question of law that has to be determined by this court. This contention of the learned counsel for the Department need not be discussed as an abstract proposition of law in the circumstances of this case. Whether the findings, either those recorded in the order on appeal or those recorded in the statement of the case, were supported by the material on record is still a matter for investigation by the court at this stage. One of the grounds on which the Department and the Tribunal held that section 25(4) could not apply was that contracts could not constitute a business. The learned counsel for the Department did not seek to support the correctness of that finding. It should be need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was with reference to contracts which never came within the scope of clause 6, and only contracts that came within the scope of clause 6, that is, contracts obtained in the name of Lourdusami, constituted the business of the family. Thus factually the partnership took over the entire business in contracts that the family had been conducting before that as constituting an association of persons. The learned counsel for the assessee referred to the decision in Kaniram Ganpatrai v. Commissioner of Income-tax [1953] 23 I.T.R. 314 in support of his contention that even if the partnership had only succeeded to the bulk of the business of the family, that would have satisfied the requirements of section 25(4) of the Act. The contention is no doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuity of business and not also continuity of assessment. Apart from that factor there was really no basis at all for the conclusion reached by the Tribunal, that there must have been a discontinuance of the partnership business sometime before 1924, and that a new partnership business must have come into existence sometime thereafter. There was only one deed of partnership, the one executed in 1920. Annexure "D" specifically referred to the partnership constituted under that document, and it was the rights of Arunachalam's heirs in that partnership that were given up by them. All the evidence points one way, that till Arunachalam's death there was no break in the business in contracts, the business which the family con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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