Law: Income Tax Act, 1922

Section: 66(1)

JUDGMENT Sinha, J.-This is a reference under section 66(1) of the Income-tax Act. I will presently state certain facts which will show that this reference has had an amazing career. In spite of the fact that it was referred back to the Appellate Tribunal on two occasions by this High Court, the matter is still not on a satisfactory footing. In fact, we were strongly tempted to send it back again for a third time, but we agree with the submission made on behalf of the parties that the matter has lingered long enough and further extending its life would be tantamount to a miscarriage of justice. The facts are briefly as follows : The three Singhania brothers, Sir Padampat Singhania, Kamlapat Singhania and Lakshmipat Singhania carry on business at Kanpur under the name and style of Messrs. Juggilal Kamlapat. They have branches at various places. One such branch was a partnership business in hosiery carried on by the three Singhania brothers together with one Jhabarmal Saraf, at Belur near Calcutta, under the name and style of Messrs. Juggilal Kamlapat. Jhabarmal Saraf was taken in as a partner on the 29th November, 1939. On 27th October, 1941, the three Singhania brothers created a trust known as the Kamla Town Trust, principally for the welfare of the employees of the Juggilal Kamlapat Cotton Spinning & Weaving Mills Ltd. of Kanpur. Members of the public have also been given certain rights under it. The three Singhania brothers became the first trustees. On 1st December, 1942, a deed of partnership was executed between Jhabarmal Saraf, and the three brothers as trustees of the Kamla Town Trust, by which they purported to constitute a fresh partnership, taking effect from the 27th March, 1942. On 2nd December, 1942, the three brothers executed a deed of relinquish ment by which they relinquished all their right, title and interest in all the assets and properties of the partnership firm constituted on the 29th November, 1939, in favour of Jhabarmal Saraf and themselves as the three first trustees of the Kamla Town Trust. The deed purported to give a retrospective effect to the relinquishment from the 26th March, 1942. What in reality happened was as follows :…

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