TMI Blog1975 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer, Tenali, took the view that Messrs. Venkata Narasimha Rao and Company and Messrs. Raja Fertilisers were but one firm and not two firms and that their income should be aggregated for the purposes of levy of income-tax. The reasons given by the Income-tax Officer for his conclusion were as follows : Both the firms consisted of the same partners and the partners held equal shares in both the firms. The two firms carried on the same type of business. The deed of partnership of the firm, Messrs. Mallela Venkata Narasimha Rao Company, authorised the doing of any other business and, therefore, the business of Raja Fertilisers was nothing more than an extension of the business of Mallela Venkata Narasimha Rao Company. That was also the result of the application of section 16 of the Partnership Act. There was also interlacing of the finances of the two firms. The ledger account of Messrs. Mallela Venkata Narasimha Rao Company in the books of Messrs. Raja Fertilisers showed total cash credits and debits of Rs. 2,35,410 and Rs. 2,16,233. The ledger account of Messrs. Raja Fertilisers in the books of Messrs. Mallela Venkata Narasimha Rao Co. showed total credits and deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership Act that under the law of partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners. (Vide Commissioner of Income-tax v. A. W. Figgies Co.). In Dulichand Laxminarayan v. Commissioner of Income-tax, the Supreme Court stated : " ...... the general concept of partnership, firmly established in both systems of law (English and Indian), still is that a firm is not.an entity or 'person' in law but is merely an association of individuals and a firm name is only a collective name of those individuals who constitute the firm. In other words, a firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership. According to the principles of English jurisprudence, which we have adopted, for the purposes of determining legal rights ' there is no such thing as a firm known to the law ' as was said by James L.J. in Ex parte Corbett : In re Shand. " The Supreme Court noticed that under Order XXX, rule 1, Civil Procedure Code, a firm was permitted to sue or be sued in the name of the firm if it was represented by two or more partners but was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be aggregated. If the same combination of identical persons carries on two businesses under different names why should the position be different ? In Vissonji Sons and Co. v. Commissioner of Income-tax, Beaumont C.J. and Chagla J. said : " In law a firm has no existence independently of its partners, and if there are two firms consisting of exactly the same partners, the real position in law is that there is only one firm. It may carry on separate businesses, and may carry on those businesses in different names but in fact there is only one firm in law. I think there is a certain amount of confusion, if I may say so, in the case arising from the failure to appreciate that at the material dates, there was in law only one firm." We are inclined to accept the observations of Beaumont C. J. as representing the correct position. Though the position appeared to be clearly stated by the learned judges, Chagla C. J., who was a party to the decision chose to distinguish those observations as mere obiter dicta, in a later case. In Jesingbhai Ujamshi v. Commissioner of Income-tax , Chagla C. J. and Tendolkar J. considered the question whether in law common partners could constitute two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f intention." A perusal of the entire report of the case shows that the statement of case was lacking in several important particulars, including particulars regarding the number of partners in the two firms at the relevant times. In those circumstances, Rankin C.J. thought that he should not express any opinion on an abstract proposition of law without having before him all the necessary factual material. It was in that view that he made the observations and we do not think that we can treat the observations of Rankin C. J. as indicating his preference for the view attributed to him by Chagla C.J. In Jeshinghbhai Ujamshi v. Commissioner of Income-tax, Chagla C.J. and Tendolkar J. reiterated the view earlier expressed by them in Jesingbhai Ujamshi v. Commissioner of Income-tax. In R. N. Oswal Hosiery anti Mahabir Woollen Mills v. Commissioner of Income-tax , Mehar Singh C. J. and Shamsher Bahadur J. followed the decision of Chagla C. J. and Tendolkar.J. in Jesingbhai Ujamshi v. Commissioner of Income-tax and held : " If there were two separate businesses by the two firms composed of the same partners having identical shares they were two different assessable units." The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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