9911796707
TMI Blog1962 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... chandra Mafatlal, Arvind N. Mafatlal, Yoginder N. Mafatlal and Hemant Mafatlal with shares of 5/16, 3/16, 3/16 and 5/16 respectively in that firm. (It has to be mentioned that Navinchandra died subsequent to the decision of the High Court and his legal representatives have been brought on record in Civil Appeal No. 502 of 1959, but this circumstance being irrelevant we are ignoring it for the purposes of these appeals). The firm was registered under the Indian Income-tax Act. There was a private limited company named Mafatlal Apte and Kantilal Limited registered under the Phaltan State Companies Act. Ten shares in this private company stood in the name of Navin Chandra, ten in the name of Arvind and twenty in the name of Hemant. For the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dividend attributable to the forty shares as the dividend income of the firm and proceeded to apportion the said income among the four partners in the proportion of the shares which each of them held in the firm and add this to the income already assessed. In doing so, however, the Income-tax Officer committed an error. In recomputing the total income of each of these four assessees he included only the net dividend " deemed to be received " by each but as against this addition he allowed a deduction of the tax paid by the company attributable to such dividend. There was no appeal against these assessment orders which became final. Subsequently this mistake was discovered and thereupon the Income-tax Officer issued notices to the four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re now before us. The ground upon which the learned judges granted the relief to the respondents was briefly this : The order of assessment had proceeded on the basis that the firm of Mafatlal Gagalbhai and Sons was the shareholder who had been in receipt of the dividend income and the individual partners of the firm had been made liable for their share of the profits derived from this registered firm. In such circumstances the learned judges held that what was distributed to the individual partners could not be deemed to be dividend income within section 16(2) of the Income-tax Act. It is to test the correctness of this construction of section 16(2) that these appeals have been preferred. In our opinion, however, the appeals have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustments so as to avoid illogicalities in an error which is still permitted to continue is well founded. It has further to be mentioned that it is not possible to correct the initial error in these proceedings because the notice under section 35 which is the foundation of the jurisdiction of the officer to effect the rectification, sought in reality not the correction of the error but the perpetuation of it though in an altered and less objectionable form from the point of view of revenue. In this connection it would be noticed that one of the four partners, Yoginder Mafatlal, had no shares standing in his name and by the order of assessment under section 34 he had been saddled with a liability to the extent of his 3/16th share in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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