TMI Blog1964 (11) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the firm to the other members of the family, but qua the partnership their relationship with the other partners had not in any way been affected and, therefore, the Tribunal went wrong in holding that the registration of the said partnership was rightly refused. In the result, it correctly answered the first question in the negative and the second question in the affirmative. Appeal dismissed. - C.A. 1099 OF 1963 - - - Dated:- 4-11-1964 - Judge(s) : K. SUBBA RAO., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SUBBA RAO J.---These appeals raise, though not the same but a similar question on which we have given a decision in Commissioner of Income-tax v. A. Abdul Rahim Co. The assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 4 After the said partition, on November 30, 195o, a new partnership deed was executed between the partners of the assessee-firm. Under the said partnership deed the following shares were allotted to each of the partners : As. (1) R. Guruswamy Naidu ... 7 1/2 (2) R. Venkatasubba Naidu ... 2 1/2 (3) G. T. Narayanaswamy Naidu ... 2 (4) G. T. Krishnaswamy Naidu ... 2 (5) Vidyasagar ... 2 The point to be noticed is that the beneficial interest in 10 annas share originally belonged to the Hindu undivided family of which Guruswamy Naidu and Venkatasubba Naidu were members. But before and after the partition of the joint family the said two persons, namely, Guruswamy Naidu and Venkatasubba Naidu, were partners of the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years 1952-53, 1953-54 and 1954-55 is lawful ? (2) If the answer to the above question is in the affirmative, whether the firm is registrable under section 26A for the aforesaid assessment years ? " A Division Bench of the Madras High Court, which heard the reference, came to the conclusion that the partnership was a genuine one, that the partition in the joint Hindu family allotting specific shares to the members of the family might have affected the accountability of the two partners of the firm to the other members of the family, but qua the partnership their relationship with the other partners had not in any way been affected and, therefore, the Tribunal went wrong in holding that the registration of the said partnership was ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that Guruswamy Naidu and Venkatasubba Naidu have less shares in the partition deed than those shown in the partnership deed. If the distinction between the three concepts is borne in mind much of the confusion disappears. A partnership is a creature of contract. Under Hindu law a joint family is one of status and right to partition is one of its incidents. The income-tax law gives the Income-tax Officer a power to assess the income of a person in the manner provided by the Act. Except where there is a specific provision of the Income-tax Act which derogates from any other statutory law or personal law, the provision will have to be considered in the light of the relevant branches of law. A contract of partnership has no concern with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers thereof under some arrangement between the said members of the family took 10 annas share in the partnership. If the contention of the revenue was of no avail in the case of representation by a single member, it could not also have any validity in the case where two members represented the divided members of the family in the partnership. As the partnership deed was genuine, it must be held that the shares given to Guruswamy Naidu and Venkatasubba Naidu in the said partnership are correct in accordance with the terms of the partnership deed. This court in Charandas Haridas v. Commissioner of Income-tax had to consider a converse position. There, a karta of a Hindu undivided family was a partner in 6 managing agency firms and the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the division of the family does not change the position of the partner vis-a-vis the other partner or partners. The income-tax law before the partition takes note, factually, of the position of the karta, and assesses not him qua partner but as representing the Hindu undivided family. In doing so, the income-tax law looks not to the provisions of the Partnership Act, but to the provisions of Hindu law. When once the family has disrupted, the position under the partnership continues as before, but the position under the Hindu law changes. There is then no Hindu undivided family as a unit of assessment in point of fact, and the income which accrues cannot be said to be of a Hindu undivided family. There is nothing in the Indian income-tax law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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