2 M. A. Palaniappa Chettiar As.
5 R. Guruswamy Naidu As.
In due companyrse Guruswamy Naidu and Venkatasubba Naidu were assessed as partners of the assessee firm on their respective shares as shown in the partnership deed.
Hence the appeals.
On appeal, the Appellate Tribunal companyfirmed the order of the Commissioner in respect of the 3 assessment years.
Appeals by special leave from the judgment dated January 24, 1961 of the Madras High Court in R.C. No.
In the result, it answered the first question in the negative and the second question in the affirmative.
Whether the aforesaid order of the Commissioner under s. 33B cancelling the registration of the firm for the three years 1952 53, 1953 54 and 1954 55 is lawful.
On August 24, 1950, the said Hindu undivided family was divided and a partition deed was executed between the members thereof.
Under the deed the ten annas share held by the family was divided as follows R. Guruswamy Naidu As.2 Rudrappa Minor son of No.
Guruswamy Naidu and Venkatasubba Naidu, the 5th and 6th partners, belonged to a Hindu undivided family and the beneficial interest of their shares belonged to that family indeed, during the previous years the joint family was assessed in respect of the income pertaining to the said shares.
2 Vidyasagar As.
1 Anna 1 Subba Naidu As.
1 4 Jagannatha Naidu As.
71 R. Venkatasubba Naidu As.
Sivaminathan and R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Subba Rao, J. These appeals raise, though number the same but a similar question on which we have given a decision in The Com missioner of Income tax, Ahmedabad v. M s. A. Abdul Rahim Co. 5 .
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The following 6 persons were the partners G. Venkataswami Naidu As.
But before and after the partition of the joint family the said two persons, namely, Guruswamy Naidu and Venkatasubba Naidu, were partners of the firm before the partition the beneficial interest in the 10 annas share was in the undivided family, but after partition the beneficial interest in the partnership was in the divided members of the family including the said two partners.
It was originally companystituted by a deed of partnership, dated June 1, 1934.
1 4 Rudrappa Naidu As.
Under the said partnership deed the following shares were allotted to each of the partners R. Guruswamy Naidu As.
2 G. T. Krishnaswamy Naidu As.
If the answer to the above question is in the affirmative, whether the firm is registrable under s. 26 A for the aforesaid assessment years.
K. Daphtary, Attorney General, N. D. Karkhanis and R. Sachthey, for the appellant.
2 The point to be numbericed is that the beneficial interest in 10 annas share originally belonged to the Hindu undivided family of which Guruswamy Naidu and Venkatasubba Naidu were members.
The assessee firm presented the deed of partnership, dated November 30, 1950, before the Income tax Officer for registration for the assessment years 1952 53, 1953 54 and 1954 55 and was duly registered under s. 26A of the Indian Income tax Act, 1922, here in after called the Act.
2 G. T. Krishnaswamy Naidu As.
The assessee firm was the Managing Agents of Palani Andavar Mills Ltd., Udamalpet.
2 G. T. Narayanaswamy Naidu As.
1099 1101 of 1963.
But the Income tax Appellate Tribunal, in respect of two of the assessments made on them, accepted their companytention and held that they were liable only to pay tax in respect of the shares shown in the partition deed.
A Division Bench of the Madras High Court, which heard the reference, came to the companyclusion that the partnership was a genuine one, that the partition in the joint Hindu family allotting specific shares to the members of the family might have affected the accountability of the two partners of the firm to the other members of the family, but qua the partnership their relationship with the other partners had number in any way been affected and, therefore, the Tribunal went wrong in holding that the registration of the said partnership was rightly refused.
2 Venkatasubba Naidu As.
1 4 After the said partition, on November 30, 1950, a new pertner ship deed was executed between the partners of the assessee firm.
21 G. T. Narayanaswamy Naidu As.
At the instance of the assessee firm the following questions of law were referred to the High Court.
1 Anna 1 Venkataramana Minor son of No.
143 of 1956.
21 By subsequent transactions the share of G. Venkataswami Naidu 1 19652S.C.R. 12.
With the result that the 5th partner, G. Guruswamy, had 7 1/2 annas share in the partnership instead of 2 1/2 annas share which he held earlier.
After the decision of the Tribunal, the Commissioner of Income tax acting under s. 33B of the Act cancelled the registration of the partnership on the ground that the partnership deed did number show the companyrect shares of the partners in the partnership.
was transferred to his son Vidyasagar and the share of M. A. Palaniappa Chettiar was purchased by R. Guruswamy Naidu.
2 1/2 K. Venkatasubba Naidu As.
