TMI Blog1951 (6) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... d (3) that on and after such disruption the business was carried on by a partnership composed of the members of the two quondam families, In order to decide whether in those circumstances there was a change in the persons carrying on a business within the meaning of Section 8(1) of the Excess Profits Tax Act, reference to no further facts is necessary. But in order that we may not appear to be deciding an abstract question of law, I may set out the actual facts of the case as found by the Tribunal. They are as follows :- The business concerned is one carried on in the name and style of Messrs. Khetra Mohan Sannyasi Charan Sadhukhan. It is carried on by a firm. Upto the 13th April, 1943, the firm was a partnership constituted of two partners, one of which was the Hindu undivided family, consisting of the four sons of Khetra Mohan and the other Hindu undivided family, consisting of the four sons of Sannyasi Charan. The families are governed by the Dayabhaga School of Hindu law and the sons of Khetra Mohan and Sannyasi Charan were all adults. On the 14th April, 1943, there was a disruption of both the families and thereupon the said sons of Khetra Mohan and Sannyasi Charan, eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal and is not before us. It appears further that it was not till the application for a reference that this question was raised for the first time in the course of a narration of additional facts which were said to be necessary for the purposes of the application, and the respondent Commissioner of Excess Profits Tax naturally objected to the attempt to raise a new question. In any event, we are bound to proceed on the facts as stated in the statement of the case, on the basis of which alone the question of law referred to us had been formulated. The finding as to the constitution of the firm before the 14th April, 1943, is supported in the statement of the case by abundant materials, but it is placed beyond all doubt and controversy by the recital of the history of the firm contained in the deed of the new partnership, dated the 28 December, 1944, which, the Tribunal says, was not traceable in the records at the time of the drawing up of the reference, but which the assessee produced before us. But, as I have already stated, we are not required, nor is it open to us, to examine any findings of fact and I need not therefore refer further to the evidence in the case. Turnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership between the members, no change in the persons carrying on the business occurred. Nor can it be said that even when there was a so-called partnership between the two families, such partnership was, in law, a partnership between all the members. That contention was sought to be raised, but there are two answers to it, each of them conclusive. The contention would be feasible if a partnership between two Hindu joint families were not possible in law and if such a partnership entered into by the kartas of the two families meant and involved a partnership between all the members of the families concerned. But in the case of P. K. P. S. Pichappa Chettiar v. Chokalingam Pillai [1934] 38 CWN 1185 the Judicial Committee quoted with approval a passage from Mayne's Hindu Law to the effect that when a managing member of a joint family entered into a partnership with a stranger, the other members of the family did not ipso facto become partners in the business, but only such of the members became partners as in fact entered into a contractual relationship with the stranger. In the present case, each family was a stranger to the other and unless the assessee would prove that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a joint family, as represented by its karla, could enter into a partnership or at least a karta, as representing his joint family, could do so. A valid partnership entered into by a karta, as representing his joint family, is thus possible and such partnership does not extend to the members of the family. On the finding of the Tribunal, therefore, the partnership before the 14th April, 1943, was no more than a partnership between the two families, represented by their respective karlas, and the contention of the assessee that its present partners, the members of the families, were all partners before the 14th April, 1943, as well, must be rejected. There is an impressive array of authorities under the Income-tax Act for the proposition that when a Hindu undivided family, carrying on a business, is disrupted and the separated members form themselves into a partnership to carry on the business, there is a succession of the person carrying on the business by another person within the meaning of Sections 25(4) and 26(2) of the Act: Kotha Govindarajulu Chelliar v. Commissioner of Income-tax, Madras [1944] ILR [1944] Mad. 504 (FB); 12 ITR 97 ; Rama Rakha Mal Sons Ltd. v. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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