Law:

Section:

Article 226 of the Constitution of India - Writ Jurisdiction - Assessee-firm had its office at Cochin - Garnishee proceedings for recovery of tax due from assessee's partner were initiated by income-tax authorities in Karnataka and notice and subsequent proceedings were addressed to firm at Cochin-Whether as part of action arose in Cochin, Kerala High Court had jurisdiction to hear petition - Held, yes Section 226(3) of the Income-tax Act, 1961 - Recovery of tax - Garnishee proceedings - Assessee-firm agreed to deposit part of sale consideration of asset belonging to it with Income-tax Department in satisfaction of income-tax dues of one of its partners subject to right to claim liabilities - Department agreed to keep amount in deposit subject to determination of liabilities - Whether revenue was entitled to appropriate out of amount deposited only net amount due to partner after deducting expenses and liabilities - Held, yes FACTS The assessee-firm having its office in Cochin also originally consisted of four partners, including one C. C, till his death in 1971 was indebted to the Income-tax Department. For realising the arrears, the revenue issued a certificate dated 12-6-1968 and one-third share of C in the partnership assets was kept under attachment by order dated 28-12-1968. Nearly 10 years thereafter, by order dated 5-1-1978 the ITO, Mysore, demanded the tax due from C. The firm wanted to sell its estate in Tamil Nadu for Rs. 35 lakhs and for it a tax clearance certificate was necessary. The firm in Cochin offered to deposit one-third share of C out of the net surplus after deducting the liabilities of the firm. The Commissioner, Karnataka, informed the firm that the proposed sale could be made, provided one-third share of the sale proceeds was deposited or irrevocable bank guarantee was secured for the amount. By letter dated 14-3-1987, the firm intimated the TRO that one-third of the amount will be deposited without prejudice to its contention that the liability was only to deposit one-third of the net amount after deducting all liabilities of the firm incurred for running and maintaining the estate. The TRO, by order dated 24-3-1987, acknowledging the…

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