Kurumberahalli Estate vs State of Karnataka

Jagannatha Shetty, J.-This revision arises out of the order of the Commissioner dated August 25, 1980, made under S. 35 of the Karnataka Agricultural Income-tax Act, 1957 (called shortly the ''Act'') setting aside the assessment order of the year 1975-76 and also cancelling the registration of the assessee-firm.

A firm styled as "Kurumberhally Estate ''A''" was evidenced by an instrument of partnership dated April 8, 1969 with effect from April 1, 1969. It comprised of four partners, namely (1) M.C. Mathew, (2) M.C. George, (3) M.M. Chandy and (4) Chandy George. The firm was granted registration under S. 29 of the ''Act''.

Under Clause (13) of the Deed of Partnership, it was provided that in the case of death of any partner, the representatives in the interest of the deceased partner shall be entitled to remain as partner on the same terms as the deceased partner.

On February 16, 1975, M.C. George died leaving behind his wife. By reason of Clause (13) in the Deed of Partnership, she, as of right, came as a partner taking the share which her husband was entitled to. On June 20, 1975, an application for renewal of registration in Form No. 8 was presented before the assessing officer and that application was signed by all the then partners including Mrs. M.C. George although the late M.C. George was shown as one of the partners. That application was accepted and renewal of registration was granted. The firm was assessed to tax as a registered firm.

The Commissioner initiated proceedings under S. 35 of the ''Act'' to revise the said assessment. He was of the opinion that since M.C. George died on February 16, 1975, the renewal application in Form No. 8 could not have been signed by Mrs. M.C. George since the law requires that all the partners then existing ought to have signed personally. He accordingly held that the renewal of registration granted on the application signed by Mrs. M.C. George was invalid.

We fail to understand the reasoning behind the order of the Commissioner. M.C. George died on February 16, 1975. Form No. 8 for renewal of registration of the firm was filed on June 20, 1975. Upon the death of M.C. George his wife has a ligitimate right to become partner with the same right and liability of her husband under Clause (13) of the dead of partnership. In exercise of that right quite naturally she alone could sign Form No. 8 and she did sign that form. She did not sign on behalf of her husband. She signed that form personally as partner. The Commissioner could not have found fault with that form on the ground that Mrs. M.C. George could not have signed for the deceased partner. We fail to understand who else could sign Form No. 8 presented on June 20, 1975 when M.C. George was not at all alive.

It is also necessary to state that upon the death of M.C. George there was no dissolution of the firm. The firm was entitled to continue with the L.R of the deceased as partner not withstanding the death of one of the partners. Secondly, the assessment was required to be made in respect of the agricultural income of that firm for the crop of the entire year of 1974-75 and not for the part of the year before the death of M.C. George. We, therefore, find there was no illegality in the application for the renewal of the registration of the firm.

In the result, this revision petition is allowed. The order of the Commissioner is set aside and the assessment order is restored.