Law: Excess Profits Tax Act, (XV of 1940)

Section: 15

Law: Excess Profits Tax Act, (XV of 1940)

Section: 15

JUDGMENT R.S. Pathak, J.-The assessee is a registered firm carrying on business in piece-goods and commission agents. It had its head office at Kanpur and a branch at Farrukhabad. It considered of two partners, Gurbux Rai and Harbux Rai, with equal shares, and each of the partners represented his own Hindu undivided family of which Gurbux Rai was a member was subsequently partitioned. The assessee's branch business at Farrukhabad was transferred to a partnership, Messrs. Pussalal Jagganlal, consisting of Harbux Rai and the divided members of Gurbux Rai's erstwhile Hindu undivided family, the shares of the partners being Harbux Rai 8 annas, Chameli Devi 4 annas and Gopaldas 4 annas. This business was taken over by the partnership on July 4, 1943. The original assessment under section 14 of the Excess Profits Tax Act was made upon the assessee on January 29, 1947, for the chargeable accounting periods ending June 21, 1944, and July 10, 1945. The assessee represented that the Farrukhabad business no longer belonged to it. This was also pointed out in the income-tax assessment for the previous year 1943-44, relevant to the assessment year 1944-45. The Income-tax Officer, however, made an assessment order on November 22, 1946, holding that there had been no partition in the family of Gurbux Rai and that the Farrukhabad business had not been transferred by the assessee, and, therefore, included the income from the Farrukhabad business in the total income of the assessee. The excess profits tax assessment for the chargeable accounting period ending June 21, 1944, was also made accordingly. Against the assessment order made by the Income-tax Officer the assessee filed an appeal, and the Appellate Assistant Commissioner while disposing of the appeal held that the family of Gurbux Rai had indeed partitioned its movable property somewhere near Asadh Samvat 2000, and that from that date the Farrukhabad business was continued by a separate firm consisting of Harbux Rai, Smt. Chameli and Gopaldas. The income-tax assessments were consequently modified, in view of the observations of the Appellate Assistant Commissioner, for the assessment years 1944-45 and 1945-46. Effect was…

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