HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay v. M/s. Shree Goverdhan Ltd., Bombay
Civil Appeal No. 17 of 1967
[1968] 2 SCR 731 ·
Indian Income-tax Act, 1922: sections 2(11), 23A(1), 26A and 66(1)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Ramaswami, J. · J. C. Shah, J. · V. Ramaswami, J. · V. Bhargava, J.
Assessment years: 1951-52
01 · Facts of the case
Shree Goverdhan Ltd. carried on its own business with accounts closing on 30 September and, from 20 April 1950, was also a partner in Indian Steel Syndicate, whose reconstituted partnership accounts closed on 30 November 1950 and 31 March 1951. The Income-tax Officer included Rs.70,895 partnership profit in assessment year 1951-52 and made a section 23A order concerning undistributed assessable income. The company argued that this partnership income arose after its own 30 September 1950 year-end and was unknown at its 17 May 1951 annual meeting. The High Court accepted that position for 1951-52, and Revenue appealed (SCR pp.732-733; PDF pp.2-3).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
Section 2(11) permitted different previous years for different sources and specifically tied a partner's profit share to the firm's assessed period. The company's own business and partnership interest were separate sources whose corresponding periods both fell within the financial year preceding 1951-52, so section 23A's reference to the company's previous year had to accommodate both (SCR pp.735-737; PDF pp.5-7). The firm's accounts had closed before the company's annual meeting. Partnership profit accrued when the company acquired the right to receive it on 31 March 1951; later ascertainment of the amount did not defer that accrued right. The Court distinguished a liability still contingent from a present debt whose amount remained to be quantified and applied the principle debitum in praesenti, solvendum in futuro (SCR pp.737-739; PDF pp.7-9).
Source: Primary judgment: discussion
03 · Judicial decision
The Court held that Rs.70,895 partnership income for the period ending 31 March 1951 belonged in the company's assessable and distributable profits for assessment year 1951-52. It set aside the contrary part of the Bombay High Court judgment, answered the reference for Revenue and allowed the appeal with costs (SCR p.739; PDF p.9).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the Commissioner of Income-tax. The section 23A order for 1951-52 was upheld because the partnership-profit share accrued within the relevant separate previous year notwithstanding later quantification (SCR pp.737-739; PDF pp.7-9).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: map every income source to the governing accounting period before determining the assessment-year base. For an accrual issue, distinguish whether only valuation remains from whether entitlement itself depends on a future contingency, and preserve the date on which the legal right arose. Re-run both timing and distribution consequences under the currently governing provisions; this repealed section 23A case supplies no present-law clearance (based on SCR pp.735-739; PDF pp.5-9).
Source: Primary judgment: reviewPoint
Source & verification
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Statutory scope
The ruling construes the repealed definition of previous year and deemed-distribution mechanism in sections 2(11) and 23A of the Indian Income-tax Act, 1922 for assessment year 1951-52. It does not determine current partnership-income timing, dividend taxation or anti-avoidance provisions. No current-law or later-treatment clearance was undertaken.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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