COMMISSIONER OF INCOME-TAX, MADHYA PRADESH versus SIR HUKUMCHAND MANNALAL & CO.

Citation: [1971] 1 S.C.R. 646 · Decided: 20-07-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

646 
· COMMISSIONER OF INCOME-TAX, MADHYA PRADESH 
v. 
SIR HUKUMCHAND MANNALAL & CO. 
July 20, 1970 
. (J.C. SHAH AND K. S. HEGDE, JJ.) 
. Income-tax Act, 1922, S. 26-A-Partnership 
including two partners 
rcprescnting interest of same 
H.U.F.-If can be 
registered-Whether 
memhers of H.U.F. suffer from any disability from entering into contract 
inter-s..:. 
H and his son R were two out of the five partners of the respondent 
firm and represented the interest 
of a Hindu 
undivided 
family. The 
Income-tax Officer granted registration of the firm under s. 26A of the 
Incomo·tax Act, 1922. Jn 1954-55, he declined to grant such registration. 
The Appellate Assistant Commissioner confirmed his order on the ground 
that two coparceners could not represent the interest of the H.U.F. in a 
partnership. The Tribunal reversed this order and the High Court. upon 
a reference o~ the question whether the respondent firm could be granted 
registration, answered it in the .affirmative. 
On appeal to this Court, 
HELD : Dismissing the appeal~ 
fhat a partnership in which two members of a coparcenary represent 
same beneficial intere't of an H.U.F., may be validly registered under the 
Income Tax. [648 C.DJ 
P_am Laxman Sugar Mills v. C~nmissioner of Income-tax. U.P. and 
Anr. 66 I.T.R. 613, P. K, P. S. Pichappa Chittiar & Ors. v. Chokalingam 
Pi/ltU & ms. A.I.R. (1934) P.C. 192 and Charandas Haridas & Anr. v. 
Commissioner o/ Income-tax, 
Bombay North, Kutch and Saurashtm. 
Ahmedal>ad & Anr. 39 I.T.R. 202, referred to. 
The Indian. Contract Act imposes no disability upon members of a 
Hindu undivided family in the matter of entering into a contract inter u 
or with a stranger. 
A member of a Hindu undivided 
family has the 
same liberty of contract as any other individual : it is restricted only in 
tho 
manner and to the extent provided by the Indian Contract Act. 
[648 HI 
It i; now settled law that in considering an application for registration 
of a firm, Lhe Income-tax Officer is not concerned to determine in whom 
the beneficial interest in the share in the partnership vests. [649 Bl 
Commissioner of Income-tax v. Abdul Rahim & Co. SS I.T.R. 651 and 
Com111i«sianer of Income-MX, Madras v •. Bagyalakshmi & Co. 55 I.T.R. 
660, rofetT'Cd to. 
· 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1774 of' 
1969. 
Appeal from the judgment and order dated February 12, 1965 
of the Madhya Pradesh High Court in Misc. Civil Case No. 112 of 
1963. 
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C.I.T. v. HUKUMCHAND (Shah, /,) 
647 
S. Mitra, R. N. Sachthey and B. D. Sharma, for the appellant. 
M. C. Chagla, R. N. Banerjee, A. K. Verma and 0. C. Mathur, 
for the respondent. 
The Judgment of the Court was delivered by 
Shah, J, A firm styled Sir Hukumchand Mannalal & Com-
pany was fonned under a deed dated July 16, 1948 to carry on 
the business of "managing and selling agents" of Hukumchand 
Mills Ltd. Sir Hukumchand and his son Rajkumar Singh were 
two o( the five partners of the firm. They represented the interest 
of the Hindu undivided family of Sir Hukumchand and his sons. 
On March 31, 1950 the property of the Hindu undivided family 
wu partitioned and the interest of the family in the partnership 
wu taken over by a private limited company styled Sir Sarup-
chand Hukumchand Ltd. 
For the assessment years 1950-51, 
1951-52, 1952-53 and 
1953-54 the Income-tax Officer grante<l. registration of the firm 
Wider s. 26A of the Indian Income-tax Act, 1922. In. 1954-55 
the InCom.e-tax Officer declined to grant registratl6n. In appeal 
the Appellate Assistant Commissioner confirmed the order on the 
ground that two coparceners could not represent the interest of the 
Hindu undivided family in a partnership. The Tribunal reversed 
the order. They held that.Sir Hukumchand and his son Rajkumar 
Singh were partners in the firm on behalf of the Hindu undivided 
family and there was nothing in law which prevented two or more 
coparceners of a Hindu undivided family representing the family 
from entering into a partnership with a stranger or strangers. 
At the instance of the Commissioner of Income-tax the follow-
ing question was referred by the Tribunal : 
"Whether in the facts and circlllllStances of the case 
the firm Hukumchand and Mannalal Company could be 
granted registration under s. 26A of the Act ?" 
The High Court answered the question in the affirmative. The 
CommiSsioner of Income-tax has appealed to this Court with 
certificate granted by

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