HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Punjab v. Chander Bhan Harbhajan Lal
Civil Appeal No. 605 of 1963
[1966] 3 SCR 176 ·
Indian Income-tax Act, 1922: sections 26A and 66(1)-(2) · Indian Partnership Act, 1932: section 4
Sources & disclosures includedDownload original judgment / order
3-judge bench; majority opinion by R. S. Bachawat, J.; J. R. Mudholkar, J. dissenting. · A. K. Sarkar, J. · J. R. Mudholkar, J. · R. S. Bachawat, J.
Assessment years: 1953-54
01 · Facts of the case
A fourteen-partner firm included Chander Bhan, who sourced capital from another firm and shared outside profits with its members. Revenue treated that other firm or all its members as the real partner and refused section 26A registration (SCR pp.178-180; PDF pp.3-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The partnership deed named Chander Bhan personally; the other firm was not a party. External funding and profit-sharing obligations did not make outsiders partners in the principal firm. The majority found no substantial question requiring reference; Mudholkar J. would have directed one on real partners and the partner limit (SCR pp.181-192; PDF pp.6-17).
Source: Primary judgment: discussion
03 · Judicial decision
By majority the appeal was dismissed with costs, leaving the Tribunal's registration result intact (SCR p.192; PDF p.17).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the assessee firm on the attempted compulsory reference; separate appeals mentioned in the terminal order lacked analysed facts (SCR p.192; PDF p.17).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: distinguish contractual membership in the firm from a partner's separate funding, representative or profit-sharing obligations. Read the deed and external arrangement separately (based on SCR pp.181-184; PDF pp.6-9).
Source: Primary judgment: review point
Source & verification
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Statutory scope
The ruling concerns repealed partnership-registration and reference machinery; current registration and partner-limit rules require separate review.
Later treatment
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