TMI Blog1974 (9) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... Pressing Factory and the decisions of the Allahabad High Court in Girdhari Lal Laxman Prasad v. Commissioner of Income-tax, Hari Om Company v. Commissioner of Income-tax and India Army and Police Equipment Factory v. Commissioner of Income-tax . Briefly, on these grounds the question of law has arisen for our opinion, especially for a consideration of the question whether the law laid down by the Supreme Court still holds good in view of the amendment made in the Indian Income- tax Act, 1922 (hereinafter called " the 1922 Act "), in the year 1956 as also in the 1961 Act. As I have said above the assessee in these cases is an unregistered firm and derived income from coal mine. The firm was assessed to income-tax by the Income-tax Officer on the amounts mentioned in the statement of the case which are not necessary to be reproduced here. The assessee challenged the figures of the assessment in appeal before the Appellate Assistant Commissioner. He modified the assessments. When further appeals were taken before the Tribunal the crucial point was taken that it was not legal to make an assessment of an unregistered firm after some of its partners had already been assessed to tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntities according to the provisions of the Act. There is no scope for the argument that under section 3 the assessment shall be only on the association of persons as a unit though after such assessment the share of the income of a member of that association may be added to his other income under section 14(2) of the Act. This construction would make the last words of the section, viz., 'members of the association individually' a surplusage. This argument is also contrary to the express provisions of section 3 which mark out the members of the association individually as a separate entity from the association of persons. Income of every person, whether he is a member of an association or not, is liable to the charge under the head 'every individual'. Section 14(2)(b) only says that if such an individual happens to be a member of an association of persons which has already been assessed, the tax would not be payable in respect of the share of his income again. That under the Act an assessment can be made on an association of persons as a unit or, alternatively, on the individual members thereof in respect of their respective shares of the income was assumed by this court in Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The effect was that in the case of a registered firm, so to say, there was a double taxation---certain amount of tax could be imposed upon the registered firm, but principally the share income derived by the partners was to be taxed in their hands. On the other hand, in the case of an unregistered firm option was given to the Income-tax Officer to tax the total income of the unregistered firm, treating it as a separate and distinct entity, or to tax the share income in the hands of the individual partners under certain circumstances, the circumstances being that the tax which would be payable by the partners would be greater than the aggregate amount which would be payable by the firm and the partners individually, if separately assessed. If the firm would have been taxed, then the share income of the partners could have been added to the other income of theirs only for the purpose of rate under section 14 of the 1922 Act. I shall also refer in this judgment to the amendment which has been brought about by the Taxation Laws (Amendment) Act, 1970, with effect from the 1st April, 1971. Although the said amended law will not cover the periods in question ; it will merely explain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered firm, the Income-tax Officer--- (a) may determine the tax payable by the firm itself on the basis of the total income of the firm ; or (b) if, in his opinion, the aggregate amount of the tax payable by the partners if the firm were treated as a registered firm would be greater than the aggregate amount of the tax which would be payable by the firm under clause (a) and the tax which would be payable by the partners individually, may proceed to make the assessment under clause (ii) of sub-section (1) of section 182 as if the firm were a registered firm ; and where the procedure specified in this clause, is applied to any unregistered firm, the provisions of sub-sections (2), (3) and (4) of section 182 shall apply thereto as they apply in the case of a registered firm." Before I explain the meaning of section 183, I would refer to the provisions of section 66, which says : " In computing the total income of an assessee, there shall be included all income on which no income-tax is payable under Chapter VII (which includes section 86) and any amount in respect of which the assessee is entitled to a deduction from the amount of income-tax on his total income with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Taxation Laws (Amendment) Act, 1970, in section 183(b) and the consequent amendments made in sections 67 and 86(iii), it would be noticed that the law now is, as it was before, that the Income-tax Officer may treat the unregistered firm as a registered firm and proceed to tax the firm as also the share income in the hands of the partners in accordance with sub-section (1) of section 182 of the Act, whereas previously in clause (b) of section 183 reference was made only to sub-clause (ii) of sub-section (1) of section 182 of the 1961 Act. It is not necessary for me to express any concluded opinion on the point, but if I may say so with respect, it is because of the amendment in the law brought about by the amending Act of 1970 that the learned author in his book, Iyengar on Income Tax, sixth edition (volume II) felt persuaded to say in his commentary on section 67, at page 1217, as follows : " A partner is a separate assessable entity as distinguished from the firm of which he is a partner. The charging section 4 of the Act of 1961 imposes a charge on 'every person'. So, the circumstance that the partner has been assessed earlier is no bar to a later assessment of the firm. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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