TMI Blog1930 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... 1933-34 under Section 34, upon the predecessor family's income of the 'previous year' 1932-33 ? (4) The assessee company having succeeded to the business in issue after notice duly served under Section 34 upon the predecessor, is the company liable to be assessed without further direct service under the section upon the company ? (5) Was it possible in law for the Income Tax Officer to hold that the assessee had not discharged the onus upon him of establishing his claim to deduction of ₹ 2,748 (credited to accounts of members of the family and their wives) as being interest upon capital borrowed within Section 10(2)(iii) ? (6) Were the salary payments attributed to members of the income-earning Family, a proper deduction from the income assessed in the charge of the successor under Section 26(2)? (7) Was it possible in law for the Income Tax Officer to hold that the assessee had not discharged the onus upon him of establishing his claim that the amount of ₹ 1,211 at the debit of Narain Singh fell irrecoverable in the 'previous year' ? (8) In the matter of interest from mortgage in account Rani Harnam Kaur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the family was in the process of partition. He, accordingly, held that the family should be deemed for the purposes of the Act to continue to be a Hindu undivided family. This order was made on the 14th February, 1935. Simultaneously, an assessment order was made on the same date and the assessee was for the purposes of the income tax of the assessment year treated as a limited company, having succeeded to the business of the Hindu undivided family and thus being liable to be assessed as a limited company presumably under the provisions of Sub-Section (2) of Section 26 of the Income Tax Act. From this order the assessee preferred an appeal to the Assistant Commissioner raising various points of law arising from the case. The Assistant Commissioner with a slight modification in the estimate of income upheld the order of the Income Tax Officer. The assessee then moved the Commissioner who as stated above has eventually referred the questions of law as set forth above with his opinion thereon. The first two questions of law referred to us can be disposed of together. They rest on the determination of the main question whether in face of the finding of the Income Tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Change of ownership of business . Sub-section (1) provides for those cases where a change has occurred in the constitution of a firm, or a new firm is constituted and sub-section (2) deals with the situation when it is found that the person carrying on any business profession or vocation has been succeeded in such capacity by another person. 'Person' as defined in clause (9) of Section 2 of the Income-tax Act includes a Hindu undivided family, and 'Person' as defined in the General Clauses Act 1897 includes any company, or association or body of individuals, whether incorporated or not. Considering that in the matter of the interpretation of statutes, our first effort should be to reconcile the various provisions of an enactment with one another and to assign to the clear words of a statute the meaning which they ordinarily carry and thinking at the same time that the Legislature has not been guilty of redundance of expression or repetition of subjects, the irresistible conclusion to which we are driven is that so far as the scheme of the Act goes, (a) each section deals only with the matters specified therein and goes no further, and (b) each section co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded, the question of succession to it as a whole by another entity does not arise. In the present case there is a clear finding of the Income-tax Officer that the family is still in the process of partition and that there has not been complete partition in the eye of the law. In these circumstances, we consider that it could not be held that the family had been entirely replaced by a limited Company. The matter, however, does not end here. It is contended on behalf of the Commissioner that the family in this case can still be treated as having been succeeded by a limited Company to the extent that it is admitted to have been replaced by a limited Company. He urges, as remarked before, that partial succession is not unknown to law and refers in this connection to Kalumal Shorimal v. Commissioner of Income Tax AIR 1928 Lah. 461, V.R.S.A.R. Arunachalam Chettiar v. Commissioner of Income Tax AIR 1929 Mad. 769, Best Co. v. Commissioner of Income Tax AIR 1932 Mad. 434, and Commissioner of Income Tax v. Sind Light Railway AIR 1932 Sind 189. In Kalumal Shorimal 's case (supra) on a partition of a Hindu undivided family the assessee got the family business as his sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the last two cases the assessee was not a Hindu undivided family. The assessee on the other hand, contends that in the first instance partial partition and partial succession are not recognised by Hindu Law, and secondly, if a Hindu undivided family is succeeded by a Company wholly or partially no change of ownership takes place within the meaning of sub-section (2) of Sec. 26. The assessee has not cited any authority in support of his first contention, nor has he developed this point in the course of his arguments, while in connection with his second contention he has relied on a recent decision of the Madras High Court in O.P. No. 285 of 1935, Thontepu Chinna Pullayya v. Commissioner of Income Tax [1937] 5 ITR 132 (Mad.), as well as Jupudi Kesava Rao v. Commissioner of Income Tax [1935] 3 ITR 339 (Mad.). The question that was referred to the Special Bench in O.P. No. 285 of 1935 was whether when all the members of a Hindu undivided family after separation and partition constitute themselves into a firm in order to continue the business hitherto carried on by an undivided family, assessment of the total income of the undivided family up to the date of separa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship into a limited liability Company . The other case relied on by the assessee reported as 9 ITC 64 is also distinguishable. There a notice had been served on G. as manager of a Hindu undivided family. G died during the assessment proceedings leaving a son who continued to carry on the family business. A question arose whether the assessment could be made under Section 26, Sub-section (2). It was held that in the circumstances of the case the assessee who was already a part-owner of the business becoming entitled to the family business by survivorship had not succeeded to the business within the meaning of Section 26(2) and hence was not liable to be assessed thereunder. Though the authorities cited for the Commissioner do not afford any help to him, yet on general principles we are disposed to agree with the contention raised by him that partial succession to a Hindu undivided family is not repugnant to any notion of law. Under Hindu law, a Hindu undivided family can through its karta alienate a part of its property to a stranger without affecting its own status in any manner. The alienee can even claim partition on the basis of his own acquisition. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it succeeds to the Hindu Undivided family, is liable to be charged as a successor in respect of the 1933-34 assessment made during 1934-35 under section 34. Question 4.-This question relates to the validity of the assessment in the absence of a formal notice served on the successor. The assessee contends that inasmuch as before the assessment was made, the person on whom the notice had originally been served ceased to exist, though partially, and another person came into being in relation to those separable businesses to which he had succeeded, no order could be made qua the latter without serving upon him a fresh notice under section 22 or section 34. Apart from the fact that the objection was not raised at the time of the assessment and could not be raised before the Assistant Commissioner as a matter of right, there is no substance in it even on the merits. The Income Tax Act does not contemplate any fresh notice to be served upon the successor, inasmuch as the proceedings once started against the predecessor continue against the successor even if the predecessor has ceased to exist. In the absence of any clear direction to the contrary, no obligation is imposed up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed therefor, or after its expiry. All that he can do under this enabling provision is to admit an -appeal for the first time even if it is presented after the period prescribed therefor. At first sight, this proposition may look startling but a reference to the provisions relating to appeals under the Code of Civil Procedure will make our meaning clear. The period of limitation for presenting such appeals is prescribed in the Schedule appended to the Indian Limitation Act. In the main Act, section 5 has been enacted to confer authority upon the appellate Courts to admit appeals in certain circumstances even after the expiry of the period of limitation prescribed therefor. In spite of the power so vested in the appellate Courts, the legislature has specifically provided in rule 2 of order XLI for the admission of additional grounds of appeal and has enabled the appellants to urge any ground not taken before, by leave of the court. The discretion vested in the courts in this matter is not circumscribed within those limits, within which it is hedged under section 5 of the Limitation Act. No such provision, however, has been made in the Income Tax Act, which relating to the matters ..... X X X X Extracts X X X X X X X X Extracts X X X X
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