Law: Income Tax Act, 1922

Section: 22

Sales tax Firm Dissolution Assessment of firm after dissolution Legality Whether partners of dissolved firm liable for tax assessed on firm Madras General Sales Tax Act (IX of 1939), S. 2 (b). Although the Madras General Sales Tax Act, 1939 and the Rules framed thereunder make no separate provision for assessing the turnover of, or for the recovery of taxes due by, a dissolved firm, the firm being a dealer as defined in section 2 (b) of the Act up to the date of its dissolution, could be assessed to sales tax even after its dissolution and the tax could be recovered from the partners of the dissolved firm. W. A. No. 132 of 1955 (unreported) fol. Deputy Commissioner of Commercial Taxes v. Bhaktavatsalam Naidu (1955) 6 S T C 657 ; Ellis C. Reid v. Commissioner of Income tax, Bombay (1931) 5 I T C 100 ; Hiralal Barman and others v. Sub Divisional Officer, Hathras, and another Writ Petition No. 1026 of 1954 decided on 7th February 1956 (unreported) ; Jagat Behari Tandon v. Sales Tax Officer, Etawah (1957) 8 S T C 459 ; Pratt, In re Ex parte Inland Revenue Commissioners v. Phillips (1952) 2 All. E R 540 ; Public Prosecutor v. Jacob Nadar (1951) 2 S T C 53 ; R. D. Fernandes, In re (1957) 8 S T C 365 ; Recols India Ltd. In re (1953) 4 S T C 271 ; Veerappan Chettiar v. Commissioner of Income tax (1957) 32 I T R 4 [ 1 and W. P. No. 397 of 1954 and W. A. No. 132 of 1955 (unreported) ref. ORDER On 15th August 1950, Ponnuswami Gramani, the petitioner, entered into a partnership with one Kurshidulla Sahib for carrying on a business in hides and skins. The name of the firm was Ponnuswami Gramani and Kurshidulla & Co., and its place of business was in Periamet, Madras. By an instrument dated 29th January 1952, the partnership was dissolved with effect from 15th January 1952. Notice of the dissolution was given to the Registrar of Firms, Madras, and also by advertisement in a Tamil newspaper. By the terms of the instrument of dissolution, Ponnuswami 'Gramani relinquished all his interests in the partnership in favour of Kurshidulla Sahib who took over all its assets and liabilities. Kurshidulla continued to do business in the same commodities. On 31st March 1953, that is…

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