9911796707
TMI Blog1953 (12) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing Association, Jabalpur, claims to be a firm constituted by a deed of partnership dated the 18th February, 1949. The partners are (i) Bharat Ice and Aerated Waters, Ltd., and (ii) The Nerbudda Ice Factory, holding equal shares in profits and losses. The deed of partnership was signed by the managing director Shri M. J. Umrigar for Bharat Ice and Aerated Waters, Ltd., and by Purushottam Lal Sood for and on behalf of Messrs. Saligram & Co., which is a firm consisting of two partners, viz., Purushottam Lal Sood and Bhoora Ram, and owns the Nerbudda Ice Factory. 3. The assessee firm applied under section 26A of the Indian Income-tax Act, 1922, for registration for the assessment year 1950-51 by an application dated 7th August, 1950, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip which subsists between persons; but a firm is not a person; it is not an entity; it is merely a collective name for the individuals who are members of the partnership. It is neither a legal entity, not is it a person. In this view, it has been consistently held that a firm as such is not entitled to enter into partnership with another firm or individuals. [See Brojo Lal v. Budh Nath, Shiv Narain v. Income-tax Commissioner, Kanhaiyalal v. Devi Dayal, Kader Bux v. Bukt Behari, Hakmaji v. Punnaji Naraindas v. Dina Nath, Basanti Bibi v. Babu Lal Poddar, Firm Brij Kishore v. Sheo Charan Lal, Ram Das v. Ram Babu and In the Matter of Jai Dayal Madan Gopal]. The reason for this view is that under section 239 of the Indian Contract Act, 1872, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in section 239 itself to the applicability of that definition of person. However, Sulaiman, C.J., was not prepared to dissent from the view that the word "person" in section 239 of the Indian Contract Act, 1872, should not be interpreted so as to include a firm. "Such an interpretation", he observed "avoids complication in dissolution of partnerships and may well be accepted. 8. The question was mooted before their Lordships of the Privy Council in Bhagwanji v. Alembic Chemical Works in which they observed: It is true that the Indian Partnership Act goes further than the English Partnership Act, 1890, in recognising that a firm may possess a personality distinct from the persons constituting it; the law in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y profit that he may derive for himself from any transaction of the firm or from the use of the property or business connection of the firm; and in section 17, the continuity of the firm, in certain circumstances, to an extent beyond its fixed term is recognised. However, similar provisions existed in the Indian Contract Act, 1872, and also, although to a smaller extent, find place in the English Partnership Act, 1890, which do not regard a firm as legal entity. [See sections 253, 256, 258 and 259 for the Indian Contract Act, 1872, and sections 20, 21, 27, 29 and 30 of the English Partnership Act, 1890]. These incidents regard the firm as distinct from its members only for certain purposes and do not invest the firm with a legal entity capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m which has dissolved, "by all persons who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased." The scheme of the Act in respect of a registered firm is to treat only the individuals composing the firm as the units of assessment, and for this purpose the rules require the application to be signed only by the said persons and not even by their agents. This rule cannot, therefore, be complied with unless all the persons who are partners of that firm individually sign the application, for in any other case the executant would be acting as an agent, in which capacity he is debarred from signing the application. It would, therefore, be repugnant to the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax.] A similar limited interpretation has been given to the term "person" for purposes of the Companies Act, 1913. [See Senaji Kapurchand v. Pannaji Devichand.] There would be obvious difficulties in the administration of the income-tax law where a fluctuating body like a firm is to be given a legal status. We, therefore, hold that a firm as such is not entitled to enter into partnership with another firm or individuals for purposes of section 26A of the Indian Income-tax Act, 1922.
13. Our answer to the question of law that is referred to us is in the negative. Costs of the proceedings and of the paper-book shall be borne by the assessee. Counsels fee ₹ 100.
Reference answered accordingly. X X X X Extracts X X X X X X X X Extracts X X X X
|
