TMI Blog1942 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the agreement, February 12, 1933, but that the parties have already entered into a partnership. It would appear, indeed, to have been the assessees' case that the oral partition and commencement of the firm took place in September, 1931, and that certain entries were made in the books at that time. When a document purporting to be an instrument of partnership is tendered under Section 26A on behalf of a firm, and application is made for registration of the firm as constituted under such instrument, a question may arise whether the instrument is intended by the parties to have real effect as governing their rights and liabilities inter se in relation to the business, or whether it has been executed by way of pretence in order to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alternative that the property was joint family property; that no written instrument is necessary for a partition of joint property; and that the transaction in this case was a partition at the hands of the father. To this the Commissioner replies that the shares allotted to the members were not the shares to which they were entitled on partition; hence the alleged transaction is not a partition in law. In this way, without deciding whether the factory was self-acquired or joint family property, and without coming to any findings of fact as to the father's powers under the customary law, the Commissioner concludes that the question propounded by him should be answered in the negative. His reason is that the sugar factory continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary 12, 1933, that the wife and sons had a share in the immovables. 3. On this view the High Court had no difficulty in agreeing with the conclusion arrived at by the Commissioner on the hypothesis that these immovables were self-acquisitions of the father. On the hypothesis that they were joint family property, however, they were bound to disagree with his view that the alleged transaction could not be a partition because the shares were not in accordance with the parties' legal rights. Indeed, this argument was not maintained before the High Court, but an argument based on Section 25A of the Act was put forward instead on the Commissioner's behalf. The High Court accepted this new contention, and was thus prepared to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of assessment. The difficulty was the more acute by reason of the provision--an important principle of the Act--contained in Section 14, Sub-section 1: The tax shall not be payable by an assessee in respect of any sum which he receives as a member of a Hindu undivided family. 4. Section 25A deals with the difficulty in two ways, which are explained by the rule, applicable to families governed by the Mitakshara, that by a mere claim of partition a division of interest may be effected among coparceners so as to disrupt the family and put an end to all right of succession by survivorship. It is trite law that the filing of a suit for partition may have this effect, though it may take years before the shares of the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an item of its property to its individual members if it takes the proper steps. 6. The result is that the reasons given by the High Court do a not justify a negative answer to the question referred. If the steps taken to vest in the wife and sons an interest in the immovable assets of the business were not legally effective, e.g., for want of a registered instrument of transfer, the negative answer would, in their Lordships' view, be right, since the a wife and sons could not compel the father to perfect a voluntary transfer. But on the assumption that the factory land and buildings were joint family property it has not been shown that a partition at the hands of the father could not be effected without a written inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary 12, 1933, and when, as to a partnership being constituted to carry on the sugar factory, and as to the assets which it was to have as a firm ? None of these essential facts have been found and stated by the Commissioner, with the result that the question referred cannot be answered until the High Court has exercised its powers under Sub-section 4 of Section 66 of the Act. Their Lordships leave it to the discretion of the High Court to specify the particular additions and alterations which the Commissioner should be directed to make. 7. They will humbly advise His Majesty that the judgment and decree of the High Court be discharged and the case remanded to the High Court for disposal after taking such action under Sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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