| Case ID |
02ea0c16-379b-44d9-9fc6-95de3e2ab2a5 |
| Body |
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| Case Number |
D-2741 of 1948 |
| Decision Date |
Jan 01, 1948 |
| Hearing Date |
Jan 01, 1948 |
| Decision |
The Tribunal's finding that the assessee was an 'association of persons' within the meaning of section 3 of the 1922 Act was upheld. The court ruled that an association formed for a business purpose that is not unlawful can still be subject to taxation, regardless of any illegalities in its formation. The court emphasized that the object and purpose of the association must be to carry on business for gain, and the mere fact of illegality in its formation does not exempt its income from taxation. Thus, the income, profits, and gains generated by the partnership were assessable to tax under the Income-tax Act. |
| Summary |
In the landmark case of K.P.G.B.U.G.M.S.S.A, Mohamad Abdul Kareem & Co. v. Commissioner of Income Tax, the Madras High Court addressed the issue of whether a partnership formed with the intent to operate arrack shops, despite being in contravention of local Abkari laws, could be classified as an 'association of persons' for the purposes of taxation under the Income-tax Act. The court confirmed that the partnership's income was taxable under section 3 of the Indian Income-tax Act, 1922, as long as the business itself was not illegal. This case underscores the principle that tax liability does not hinge on the legality of the partnership's formation but rather on the nature of the business operations. Keywords include 'income tax', 'association of persons', 'Madras High Court', 'tax liability', 'partnership law', 'Abkari law', 'Indian Income-tax Act'. |
| Court |
Madras High Court
|
| Entities Involved |
Not available
|
| Judges |
RAJAMANNAR, C.J.,
YAHYA ALI, J.
|
| Lawyers |
T.L. Venkatarama Iyer,
C.S. Rama Rao Saheb
|
| Petitioners |
K.P.G.B.U.G.M.S.S.A, Mohamad Abdul Kareem & Co.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1948 SLD 6,
(1948) 16 ITR 412
|
| Other Citations |
Birendrakishore Manikaya v. Secretary of State for India [1921] ILR 48 Cal. 766,
Canadian Minister of Finance v. Smith [1927] AC 193,
Chandrika Prasad Ram Swrup v. CIT [1939] 7 ITR 269 (All.),
Chuunilal Kalyandas, In re AIR 1925 All. 287,
CIT v. Laxmidas Devidas [1937] 5 ITR 584 (Bom.),
CIT v. Mohideen Sahib AIR 1927 (Mad.) 1052,
CIT v. Mrs. Saldhana AIR 1932 Mad. 378,
B.N. Elias, In re [1935] 3 ITR 408 (Cal.),
Firm of Pannaji Devichand v. Firm of Senaji Kapurchand [1926] ILR 50 Mad. 175,
Firm of Sonaji Kapurchand v. Firm of Pannaji Devichand [1930] 59 MLJ 435,
Hayes v. Duggan (1929 IR 406),
Hotz Trust Case AIR 1930 Lah. 929,
Italia v. Cowasjee (ILR 1944 Mad. 697,
Lindsay, Wooward and Hiscox v. Commissioners of Inland Revenue [1933] (1933 SC 35; 1933 SLT 57; 18 Tax Cas. 43),
Madangopal v. Shawal Das [1934] (ILR 16 Lah. 574),
Mann v. Nash [1932] 1 KB 752; 101 LJ KB 270; 48 TLR 287; 16 Tax Cas. 523,
Mewaram v. Ramgopal [1926] (ILR 48 All. 735),
Main Channu Factories Union v. CIT [1936] 4 ITR 203 (Lab.),
Mufti Mahomed v. CIT [1936] 4 ITR 412 (All.),
Neelamega Sastri v. Appiah Sastri [1906] ILR 29 Mad. 477,
Padstow Total Loss and Collision Assurance Association, In re ([1882] 20 Ch. D. 137; 15 LJ Ch. 344; 45 LT 774; 30 WR 326),
Panchena Manchu Nayar v. Gadinhare Kumaranchath Padamanabhan Nayar [1896] (ILR 20 Mad. 68; 7 MLJ 26),
Ramanaydu v. Seetharamayya [1934] (ILR 58 Mad. 727; 68 MLJ 570),
Shri Gopalji Company v. CIT AIR 1931 Lah. 376,
Smith v. Anderson ([1879] 15 Ch. D. 247; 50 LJ Ch. 39; 43 LT 329; 29 WR 21),
Southern (H.M. Inspector of Taxes) v. A.B. Ltd. ([1933] 1 KB 713; 102 LJ KB 294; 149 LT 22; 18 Tax Cas. 59; 1 ITR 176)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
4,
3
|