JUDGMENT

CLLISTER and BAJPAI, JJ. - This is a reference u/s 66(2) of the Indian Income Tax Act by the learned Commissioner of Income Tax, Central and United Provinces, by which our opinion is sought on one question of law. The statement is dated the 5th January 1936 and the question of law is :-

"Whether, when at the time of assessment, a genuine firm had emerged from the disruption of a Hindu undivided family, the joint income of the account year - whether allocable to a part or the whole of that year - had to be assessed in the manner laid down in Section 25A(2); or whether, in view of the succession to the business of the assessee - an erstwhile Hindu undivided family - by a partnership firm consisting exclusively of the members of the family, the assessment had to be made in the manner laid down in Section 26(2)".

The facts may be briefly stated. The assessment year in question is 1933-34 and the accounting year is the Sambat year 1989 ending roughly with the financial year 1932-33. The assessees Messrs. Jugal Kishore Mukat Lal of Khurja were assessed up to the assessment year 1932-33 as a joint Hindu family. The assessment for the year 1933-34 was made by the Income tax Officer on the 19th December 1934. Prior to this date an application had been made to him that a partition had taken place amongst the members of the undivided family and that a firm had been newly constituted and therefore the Income Tax Officer should proceed to assess under Sec. 26 of the Indian Income Tax Act and should also register the firm under Sec. 26-A of the Act. The Income Tax Officer held in the course of the assessment order itself that actual separation in the family took place in the beginning of Sambat 1980 corresponding roughly to April 1933. He refused to register the firm under Sec. 26-A and made the assessment on the basis of Sec. 25-A (2).

His order was confirmed in appeal by the Assistant Commissioner of Income Tax. On a joint application for review under Sec. 33 and for a reference to this Court under Sec. 66(2) the learned Commissioner of Income Tax refused to give any relief under Sec. 33, but referred the case to us under Sec. 66(2). In his order under Sec. 33 he observes as follows :

"The real point at issue ....... is whether when, at the time of assessment, a genuine firm has emerged from the disruption of a Hindu undivided family, the income of the account year is to be assessed in the manner laid down in Sec. 95-A or whether in view of the succession to the business of the erstwhile Hindu undivided family by a partnership firm, it is to be made in the manner laid down in Sec. 26(2). The questions of disruption and succession arose simultaneously in the course of the assessment in dispute and were present before the Income Tax Officer at the time of making it. If it is held that in such circumstances the provisions of Sec. 25-A(2) have been eclipsed by those of Sec. 26(2), I have no hesitation in accepting the contention that the emergent firm whose existence has not been disputed should have been registered under sec. 26-A...... If the assessee is successful and the High Court holds that in the simultaneous application of Secs. 25-A and 26(2) the assessment must be made in the manner laid down in the latter section, that is to say, that it must be made on the footing that a succession had occurred, then the assessee would be entitled and I should be prepared to order an assessment in the status of a registered and not an unregistered firm".

It is thus clear that if we answer the question of law formulated by the Commissioner in favour of the assessee, the Commissioner would be prepared to give him adequate relief by passing formal orders.

As we said before, the Income Tax Officer made the assessment on the 9th of December 1934; the disruption on the family took place sometime in April 1933 and, as pointed out by the Commissioner, the question of disruption and succession arose simultaneously. We must therefore take it that at the t