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TMI Blog1956 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... again as the attorney of Subba Rao. Those rules provide that an application for registration of a firm under section 26A and for renewal of registration certificate "shall be signed personally by all the partners". The Income-tax Officer rejected the application for renewal on the ground that it was not personally signed by one of the partners, Subba Rao, and that the signature of Hariprasada Rao as his agent was not valid. The order was taken in appeal, and was ultimately the subject of a reference under section 66(1) of the Act to the High Court of Madras, which held that the word "personally" in rule 6 required that the partner should himself sign the application, and that the principles of agency under the general law were excluded. (Vide Commissioner of Income-tax v. Subba Rao). While these proceedings were pending, Hariprasad Rao filed the two applications, out of which the present appeals arise, for renewal of the registration certificate for the assessment years 1943-44 and 1944-45. Both of them were signed by him for himself and as attorney for Subba Rao. At the hearing of these petitions the appellant, apart from maintaining that rules 2 and 6 did not, on their true cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decisions, that the signature which is prescribed by the rules is that of the partner himself, and that they are not complied with by the agent signing on his behalf. Then we come to the second question--and that is the substantial question that arises for our determination in this appeal--whether rules 2 and 6 are ultra vires the rule-making authority. The argument of the appellant in support of its contention that the rules are ultra vires may thus be stated : Under the common law of England, a person has the right to do through an agent whatever he can do himself, and that right has also been conferred on him in this country by section 2 of the Powers-of-Attorney Act (VII of 1882), which runs as follows : " The donee of a power-of-attorney may, if he thinks fit, execute or do any assurance, instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power : and every assurance, instrument and thing so executed and done, shall be as effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof. " This sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the act to be performed is personal in character, or is annexed to a public office, or to an office involving fiduciary obligations. But apart from such exceptions, the law is well settled that whatever a person can do himself, he can do through an agent. It has accordingly been held that "at common law, when a person authorizes another to sign for him the signature of the person so signing is the signature of the person authorizing it" : Per Blackburn, J., in The Queen v. Justices of Kent. The appellant is therefore right in his contention that unless the statute itself enacts otherwise, an application which a partner has to sign would be in order and valid, if it is signed by his authorised agent. The question then is whether there is anything in the Act, which requires that an application under section 26A should be signed by the party personally. Section 26A is as follows : " (1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated by the existing law, and that, therefore, far from showing an intention either to alter the general law as to the right of a person to act through his agent or to repeal section 2 of the Powers-of-Attorney Act, the section depends on their continued operation for its implementation. Now, the rules of construction on which the appellant relies are well-established. But then, it should not be overlooked that they are only aids to ascertain the true intention of the legislature as expressed in the statute, and the question ultimately is, what in the context do the words of the enactment mean ? The following passage from Crawford on "The Construction of Statutes", 1940 Edition, page 454, cited by the appellant may be usefully referred to in this connection : " Why should a statute be subjected to a strict or a liberal construction, as the case may be ? The only answer that can possibly be correct is because the type of construction utilized gives effect to the legislative intent. Sometimes a liberal construction must be used in order to make the legislative intent effective, and sometimes such a construction will defeat the intent of the legislature. If this is the proper conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d must be signed by the assessee personally. It is argued for the appellant that Commissioner of Agricultural Income-tax v. Keshab Chandra Mandal was a decision only on the interpretation of rule No. 11 and not on its validity, and that the question whether the rule was ultra vires or not was not in issue. That is so, but the materiality of the decision to the present controversy lies in this that the interpretation which was put on rule 11 as requiring personal signature was based on the conclusion which this Court reached on a consideration of the relevant provisions of the Bengal Agricultural Income-tax Act that the intention of the legislature was to exclude the rule of the common law on the subject. Now, the provisions of the Bengal Act which were construed in Commissioner of Agricultural Income-tax v. Keshab Chandra Mandal as indicative of the above intention, are identical in terms with the corresponding provisions in the Indian Income-tax Act, and are, in fact, based on them, and it would therefore be logical to construe the latter as expressing an intention to discard the rule of common law on the subject. The relevant provisions of the Bengal Agricultural Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, a firm is not a juristic person, the firm name being only a compendious expression to designate the various partners constituting it. But, as pointed out by this Court in Dulichand Laxminarayan v. Commissioner of Income-tax, Nagpur, inroads have been made by statutes into this conception, and firms have been regarded as distinct entities for the purpose of those statutes. One of those statutes is the Indian Income-tax Act, which treats the firm as a unit for purposes of taxation. Thus under section 3 of the Act the charge is imposed on the total income of a firm, the partners as such being out of the picture, and accordingly under section 23 of the Act, the assessment will be on the firm on its total profits. Section 23(5) enacts an exception to this in the case of firms registered under the Act, and provides that, " (a) ......... the sum payable by the firm itself shall not be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined. " Thus, if a firm is registered, it ceases to be a unit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and are therefore ultra vires. In addition to the reasons given above in support of the conclusion that the rule of the common law was not intended to operate in the field occupied by section 26A, there is a further and a more compelling reason why this contention should not be accepted. It is that there is, in fact, no conflict between the two statutory provisions. To understand the scope of section 2 of the Powers-of-Attorney Act, it is necessary to refer to the history of this legislation. Under the common law of England, an agent having authority to execute an instrument must sign in the name of the principal if he is to be bound. If the agent signs the deed in his name albeit as agent, he is the person who is regarded as party to the document and not the principal. It is the agent alone that can enforce the deed, and it is he that will be liable on it. Vide In re International Contract Company, Schack v. Antony, Halsbury's Laws of England, 3rd Edition, Volume 1, page 217, and Bowstead on Agency, 10th Edition, page 93. To remove the hardships resulting from this state of the law, the Conveyancing and Law of Property Act, 1881 (44 and 45, Vict., chapter 41) enacted section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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