9911796707
TMI Blog1977 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu undivided family. The firm carried on ghee business under the name and style of M/s. Ghewarchand Kewalchand. Until, and inclusive of the assessment year 1958-59, the income from the said ghee business was assessed to tax in the hands of the Hindu undivided family. On October 23, 1957, which was the last day of the accounting year (assessment year 1958-59), the Hindu undivided family claimed to have effected a partial partition in respect of the said ghee business, and to have formed a partnership under the name and style of Ghewarchand Kewalchand consisting of the following partners who were to share equally profit or loss, as the case may be : (1) Ghewarchand, s/o Pratapchand, 5 annas and 4 pies in a rupee. (2) Kewalchand, s/o Ghewarchand, 5 annas and 4 pies in a rupee. (3) Meghraj, s/o Ghewarchand, 5 annas and 4 pies in a rupee. In consequence of this, the newly formed firm, M/s. Ghewarchand Kewalchand, by an application dated June 26, 1958, under section 26A of the Indian Income-tax Act, 1922, applied for registration of the firm for the year 1959-60 and for continuance of the registration for the year 1960-61. The terms of the partnership were recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -60 or for the assessment year 1958-59. If it was made for the year 1958-59, then it could not be a ground for holding that there was no partial partition as alleged by the assessee. The assessee's contention was that the amount of Rs. 293 which was paid on September 29, 1958, was the second instalment. The matter was sent back to the Tribunal. By an additional statement of the case dated July 30, 1976, it has found as follows : (i) The notice for advance payment of tax under section 18A(1) was issued to the H.U.F. for the assessment year 1958-59. The notice of demand was for Rs. 893 and it was dated May 1, 1957. (ii) On November 18, 1957, the H.U.F. deposited Rs. 600 as the first instalment of the advance tax for the year 1958-59. (iii) On September 29, 1958, the second instalment of Rs. 293 was deposited. The Tribunal, in the additional statement of the case, says " We find that the payment of Rs. 293 was deposited as a part of the advance tax payable for the assessment year 1958-59, and not as a part of advance tax for the assessment year 1959-60. This is the true state of affairs." Shri Chitaley, learned counsel for the assessee, states before us that the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the Hindu undivided family. The learned counsel further argued that we could not proceed on surmises and conjectures and it was not permissible to hold that, even if there was no partial partition on the 23rd October, 1957, the very recital in the instrument of partnership brought about disruption of the Hindu undivided family in the eye of law. This is because that instrument of partnership came into existence on the 26th October, and not on the 23rd October of that year. It was emphasised by Shri Tamaskar that in the present proceedings we could not travel outside the questions referred to us. It is an outstanding feature of this case that the Tribunal has found that the partnership was formed on October 23, 1957. This is very significant. The basis for this finding is the instrument of partnership dated October 23, 1957. In other words, the Tribunal believed and relied on the instrument of partnership which was admittedly executed by partners on October 26, 1957. It contains the following unequivocal statements : " WHEREAS party Nos. 1 to 3 (Ghewarchand, Kewalchand, Meghraj) along with Gajrabai w/o Ghewarchand formed the Hindu joint family, Ghewarchand Kewalchand, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n existence at the time of assessment. No difficulty whatever in the assessment of a Hindu undivided family is caused-or was ever thought to be caused--by the facts that in one year it has certain assets and certain income therefrom and that in the next year it is found to have parted with one asset and to be no longer in receipt of the same income. The same assessee has a different income in each year--that is all. It matters nothing whether the particular asset no longer possessed by the undivided family has become the separate property of a member or belongs to a stranger." In the present case, the whole ghee business was transferred, lock, stock and barrel, by the Hindu undivided family to the partnership firm. It was, therefore, not significant whether a capital account was made, and assets and liabilities were actually divided between coparceners. In the first question referred to us, the word " therefore " is markworthy. It must be held that even if there was no evidence before the Tribunal to come to the conclusion that there was ascertainment of the capital assets of the business on October 23, 1957, it did not follow as a necessary consequence that there was no part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our view, where a partial partition is effected in respect of a business of the joint Hindu family and a partnership is formed by the members of the Hindu undivided family in respect of that business which is transferred, lock, stock and barrel by the Hindu undivided family to the partnership firm, ascertainment of capital is not a necessary requirement of the law to effect the partial partition. The partnership firm of M/s. Ghewarchand Kewalchand was, therefore, entitled to registration as a partnership firm under section 26A of the Indian Income-tax Act, 1922. Our answer to the first question is : Even if there was no evidence before the Tribunal to come to the conclusion that there was ascertainment of capital assets of the business on October 23, 1957, it did not follow as a necessary consequence that there was no partial partition on October 23, 1957. Our answer to the second question is : Even on the finding that there was no ascertainment of the capital assets on October 23, 1957, the Tribunal was not justified in its conclusion that partnership was not in the eye of law brought into existence on October 23, 1957, although as a matter of fact it was. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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