TMI Blog1990 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act (section 29). The Commissioner of Commercial Taxes, respondent herein, in exercise of his power under section 35 of the Act, issued a show-cause notice dated December 20, 1978, as at annexure-E calling upon the assessee-firm to show cause as to why: (1) for the assessment year 1971-72, the income of Sri M. S. Jayaprakash, a minor partner, admitted to the benefits of the firm should not be clubbed with the income of his father, M. L. Srinivasa Setty, and assessed in terms of clause (b) of sub-section (2) of section 11 of the Act in the view that separate assessment to tax of their income was prejudicial to the Revenue ; (2) that, with reference to the assessment year 1972-73, the firm ought to have been assessed as an unregistered firm inasmuch as the application for renewal of registration under the Act had not been signed by all the partners. Similarly, the assessments for the assessment years 1973-74 and 1974-75 were also found fault with for the same reason. This power came to be exercised by the Commissioner even under the second head mentioned by us on the ground that the assessment of the firm as a registered firm was prejudicial to the Revenue. The assessee-fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undivided family consisting of M. L. Srinivasa Setty, the father and the karta of the undivided family, and his nine sons. By a declaration made by the parties as from March 28, 1968, the status of Hindu undivided family was renounced and they came to hold the properties owned by them as tenants-in-common and, thereafter, on March 27, 1970, by a registered deed of partition, the properties held by the family were divided among the coparceners. It was in those circumstances that, for the assessment year 1971-72, registration was sought under the Act after having registered themselves as a firm under the Partnership Act by a deed of partnership dated August 22, 1970, and obtained registration as such under the Act in terms of section 29 of the Act for the relevant assessment year, namely, 1971-72. Mr. G. Sarangan, learned counsel appearing for the petitioner-firm, contended before us that having regard to the decision of the Full Bench of this court in the case of C. Arunachalam v. CIT [1985] 151 ITR 172, this court should have no hesitation to set aside the order of the respondent-Commissioner in view of the fact that the Full Bench had held that the words "any individual" and "s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural income. Therefore, having regard to the mandate of section 11(2)(b) which reads as follows : "11(2). In computing the total agricultural income of any individual, there shall be included all such agricultural income as arises directly or indirectly, -. . . (b) to a minor child (not being a married daughter) of such individual, (i) from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner ; (ii) from assets transferred directly or indirectly to the minor child by such individual otherwise than for adequate consideration;" the Commissioner was correct in coming to the conclusion that the father and the minor son, both being partners of the same firm in their individual capacity, regard being had to the factum of apportionment admitted by them in the deed of partnership itself, there was prejudice caused to the Revenue inasmuch as a higher rate of tax under the amount of income exceed Rs. 40,000 was avoided or allowed to escape by the assessee by not clubbing the income of the minor son with that of the father. Therefore, we do not think that either the Full Bench decision of this court is of any assistance to the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of dissolution: Provided that, where an application is made under clause (e) after the dissolution of the firm, it shall be signed by all the persons who were partners in the firm immediately before the dissolution and by the legal representative of any such person who is deceased." "14. Form of application for registration of firms under section 29. -The application referred to in rule 13 shall be made in Form 7 and shall be accompanied by the original instrument of partnership under which the firm is constituted, together with a copy thereof, provided that, if the Agricultural Income-tax Officer is satisfied that, for some sufficient reason, the original instrument cannot be conveniently produced, he may accept a copy of it, certified in writing by all the partners (not being minors) or where the application is made after dissolution of the firm, by all the persons referred to in the proviso to the said rule, to be a correct copy, and in such a case, the application shall be accompanied by a duplicate copy." "17. Application for renewal of registration of firm. -Any firm to which a certificate of registration has been granted under rule 15 may apply to the Agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court, in the case of State of Uttar Pradesh v. Babu Ram Upadhya, AIR 1961 SC 751, had occasion to consider the directory or mandatory nature of a statutory provision by applying certain tests. K. Subba Rao J. (as he then was), speaking for the majority, held as follows (headnote) : "When a statute uses the word 'shall, prima facie, it is mandatory, but the court may ascertain the real intention of the Legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the Legislature, the court may consider, inter alia, the nature and the design of the statute, and the consequences which could flow from construing it one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstances that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. Rule I of para 486 of the U. P. Police Regulations is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a member of the firm that the firm was registered without his consent or knowledge, it will not be open to the Commissioner to go behind the grant of registration by the officer concerned and then record finding that the firm should have been assessed as an unregistered firm. No such provision is made that the assessee-firm or association of persons may be assessed as an unregistered firm under the provisions of the Act. The firm was not made aware in the show-cause notice as to how it was prejudicial to the interests of the Revenue to assume jurisdiction under section 35 of the Act by the Commissioner. We see that the only provision which throws some light on the facts of this case in regard to registration is rule 23 of the Rules and that is as follows : "23. Appeal under section 32 to the Deputy Commissioner. -An appeal under section 32 shall, (a) in the case of an appeal against the order of the Agricultural Income-tax Officer under section 19, be in Form 13 ; (b) in the case of an appeal against the order of the Agricultural Income-tax Officer under sub-section (2) of section 26, be in Form 14; (c) in the case of an appeal under section 32, be in Form 15; (d) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
