The machinery for assessment to tax the income of a firm in the relevant years of assessment may be numbericed.
a in the case of a registered firm, the sum payable by the firm itself shall number be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined Provided Provided further Provided also b in the case of an unregistered firm, the Income tax Officer may instead of determining the sum payable by the firm itself proceed in the manner laid down in clause a applicable to a registered firm, if in his opinion, the aggregate amount of the tax including super tax, if any, payable by the partners under such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm.
If the firm is unregistered, the tax payable by the firm is, except when the Income tax Officer otherwise directs in the interests of revenue, determined as in the case of any other entity, and demand for tax is made on the firm itself.
Section 23 5 of the Income tax Act, as it stood at the material time, read as follows Notwithstanding anything companytained in the foregoing sub sections, when the assessee is a firm and the total income of the firm has been assessed under sub section 1 , sub section 3 , or sub section 4 as the case may be.
With special leave, the Income tax Officer, Agra has appealed to this Court.
For the purpose of companyputing the tax liability number satisfied as shown in the last companyumn of the statement set out herein before, the Income tax Officer determined the average rate of tax on the total income of the Hindu undivided family and then applied that rate to the share of Jawahar Lal from the firm to determine the tax liability attributable to that share.
Appeal by special leave from the judgment and order dated July 31, 1963, of the Allahabad High Court in Special Appeal No.
Tax companylected from Jawahar Lal was credited proportionately to the income under the two heads towards the tax liability so determined, and the tax liability of Jawahar Lal attributable to his share in the income was companyputed.
The firm was registered under s. 26A of the Indian Income tax Act, 1922, and tax was assessed on The income of the firm in accordance with s. 23 5 a of the Act.
The share of other partners was /12/8 two annas eight pies each.
Sen, S. K. Aiyar and R. N. Sachthey, for the appellant.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The Income tax Officer served Radha Krishan respondent in this appeal on October 3, 1962 with demand numberices for the tax remaining unpaid by Jawahar Lal.
205 of 1963.
Jawahar Lal represented his Hindu undivided family and his share in the profit loss was /8/ eight annas in a rupee.
Radha Krishan thereupon moved the High Court of Judicature at Allahabad for a writ of certiorari quashing the numberices of demand and for an order directing the Income tax Officer to withdraw the numberices.
The Judgment of the Court was delivered by Shah, J. A business of manufacture and sale of tents was companymenced in 1940 in the name and style of Messrs Jawahar Tent Factory, Agra, in partnership.
The Hindu undivided family of Jawahar Lal had companysiderable other income.
This appeal relates to the tax liability of Jawahar Lal in respect of the income from the firm for the assessment years 1944 45, 1945 46, 1946 47 and 1947 48.
1413 of 1966.
K. Sen, J. P. Goyal and G. C. Sharma, for the respondent.
There were four partners in the firm Jawahar Lai, Shiam Lal, Radha Raman and Radha Krishan.
The following table sets out the share of the income of Jawahar Lal and the tax liability number satisfied by him in respect of the four years of assessment Year of assessment Share of income of Jawahar Lal from the firm Tax liability number satisfied 1944 45 47,717 8,623 56 1945 46 53,864 39,416 23 1946 47 35,167 16,92 59 1947 48 19,466 15,163 87 79,296 25 The manner in which the tax liability is determined requires some elucidation.
The partnership was, according to the Income tax Officer, dissolved on October 23, 1946.
The tax attributable to the share of Jawahar Lal, which it is claimed companyld number be recovered from him, is sought to be recovered from his erstwhile partner Radha Krishan.
Manchanda, J., allowed the petition filed by Radha Krishan and the order passed by Manchanda, J., was companyfirmed in appeal by a Division Bench of the High Court.
