JUDGMENT JUDGMENT judgment of court was delivered by BALAKRISHNA MENON J.-The following question at instance of Revenue has been referred to this court by Income-tax Appellate Tribunal, Cochin Bench, under s. 256(1) of I.T. Act, 1961 (hereinafter referred to as " Act "): " Whether, on facts and in circumstances of case, income of firm, M/s. C.A. Ouseph & V. J. Paul, has to be included in assessment of assessee-firm (M/s. C. A. Ouseph & Sons) for assessment years 1972- 73, 1973-74 and 1974-75? " partners of assessee-firm are also partners of another firm by name, M/s. C. A. Ouseph & V. J. Paul, carrying on business in grocery and general merchandise at Trichur. assessee-firm is carrying on business in jewellery at Trichur. Differing from views expressed by Commissioner in respect of assessments for years 1972-73 and 1973-74 in proceedings under s. 263 of Act and by AAC with respect to assessment for year 1974-75, Income-tax Appellate Tribunal, Cochin Bench, has allowed appeals relating to different periods aforesaid, directing deletion of income of firm, M/s. C. A. Ouseph & V. J. Paul, from total income of assessee-firm. According to Appellate Tribunal, both firms are separate entities falling within definition of expression it person " in s. 2(31) of Act, and income of both firms cannot be clubbed together and aggregated for purpose of assessment of assessee-firm, even though partners of both firms are same. Appellate Tribunal has found that both firms are registered under s. 185 of I.T. Act. There is no interlacing or interlocking between businesses carried on by two firms and mere fact that partners of both firms are same and they share profits in same ratio, does not authorise Income-tax Department to club together income of both firms and assess tax on income so aggregated. Appellate Tribunal has followed decision of Division Bench of this court in Dy. Commr. of Sales Tax v. Kelukutty [1978] 42 STC 108 (Ker). Since correctness of decision in Dy. Commr. of Sales Tax v. Kelukutty [1978] 42 STC 108 (Ker), is challenged by learned counsel for Revenue, this case has come up before Full Bench on reference by Division Bench of this court. Section 2(23) of I.T. Act defines " firm partner and " partnership " as having meanings respectively assigned to them in Indian Partnership Act, 1932, subject to exception that expression " partner " shall also include any person who being minor has been admitted to benefits of partnership. charge of income-tax under s. 4 of Act is on every person whose total income of previous year or years is liable to income-tax under Act. expression " person " as defined in s. 2, clause (31), of Act includes also firm. Chapter XVI of Act relates to assessment of firms and s. 185 prescribes procedure for registration of firms by ITO. There is no dispute that assessee-firm as well as firm under name and style "C. A. Ouseph & V. J. Paul" are both separately registered under s. 185 of Act. Appellate Tribunal has found that both firms are doing independent business and there is no interlacing or interlocking of business of both firms. Counsel for Revenue relies on observations of Beaumont C.J., speaking for court, consisting of himself and Chagla J. (as he then was) in Vissonji Sons and Co. v. CIT [1946] 14 ITR 272 (Bom) at page 275: " In law, firm has no existence independently of its partners, and if there are two firms consisting of exactly same partners, real position in law is that there is only one firm. It may carry on separate businesses, and may carry on those businesses in different names but in fact there is only one firm in law. " Those observations of learned Chief justice were found to be obiter and not laying down correct law. In later decision of Bombay High Court in Jesingbhai Ujamshi v. CIT [1950] 18 ITR 23, Chagla C.J., speaking for Bench consisting of himself and Tendolkar J., stated at page 27: " With great respect to learned Chief justice, actual question that he had to consider in that reference was whether certain item which assessee claimed as bad debt was bad debt or not, and learned Chief Justice disposed of that reference by coming to conclusion that this question was really question of fact and only question of law that arose was whether there was sufficient evidence to justify finding of fact by Tribunal. Therefore, this particular observation on which Tribunal has relied was not called for determination of reference and, therefore, it must be looked upon as pure obiter. " Division Bench disagreed with opinion expressed by Beaumont C.J. and held that " there is nothing in law to preclude common partners constituting two separate firms for purpose of Incometax Act". Since, however, question whether there were actually two firms or only one had not been considered, Tribunal was directed to determine question of fact for purpose of assessment under I.T. Act. question of law was answered in favour of assessee that it is open for common partners to constitute separate firms in respect of different businesses carried on by them for purpose of I.T. Act. This decision was followed by Division Bench of Punjab and Haryana High Court in Punjab Co-operative Bank Ltd. v. CIT [1968] 70 ITR 849 (sic). Counsel for Revenue placed considerable reliance on decision of Madras High Court in Iyanay Coffee & Tea Company v. CIT [1970] 78 ITR 775 and of Andhra Pradesh High Court in Addl. CIT v. Venkata Narasimha Rao & Co. [1976] 104 ITR 28, where view expressed by Beaumont C.J. in Vissonji Sons & Co.'s case [1946] 14 ITR 272 (Bom) was accepted as laying down correct law on point. Madras High Court in Iyanar Coffee & Tea Company's case [1970] 78 ITR 775, distinguished decision in Jesingbhai Ujamshi's case [1950] 18 ITR 23 (Bom), as, in its view, " learned judges took different view probably because there was not identity of business between two firms having common partners and, in fact, facts disclose that sharing of profits also was in different proportions " (page 779). It was, however, stated at page 781: " But, as in case under consideration, if factually firm and assessee are one due to their commensality, interlacing and interlocking, then, notwithstanding fiscal concept which compels independent recognition of two concerns as two legal entities, it follows that affairs of one ought to be considered and dealt with as affairs of other." decision of Madras High Court in Iyanar Coffee & Tea Company's case [1970] 78 ITR 775, should, therefore, be confined as relating to peculiar facts of case. Full Bench of Andhra Pradesh High Court in CIT v. Parthasarathy Naidu & Sons [1980] 121 ITR 97, has dissented from view expressed by Beaumont C.J. in Vissonji Sons and Co.'s case [1946] 14 ITR 272 and has followed decision in Jesingbhai Ujamshi v. CIT [1950] 18 ITR 23 (Bom) and other decisions following same view. decision of Division Bench in Addl. CIT v. Venkata Narasimha Rao & Co. [1976] 104 ITR 28 was overruled. Propositions Nos. 4 and 6 laid down by Full Bench at page 108 are extracted below: " 4. Under income-tax law firm is independent and distinct juristic person for purpose of assessment as well as for recovery of tax as it is a'person' within meaning of s. 2(31) of Act, having its own entity and personality. It is also separate entity under sales tax law....... 6. In law, there is no prohibition for creation or existence of two or more separate firms or partnerships by same partners." CIT v. A. W. Figgies & Co. [ 1953] 24 ITR 405 (SC), it is stated, with reference to provisions of Indian I.T. Act, 1922, as follows at page 409: " partners of firm are distinct assessable entities, while firm as " partners of firm are distinct assessable entities, while firm as such is separate and distinct unit for purposes of assessment. Sections 26, 48 and 55 of Act fully bear out this position. These provisions of Act go to show that technical view of nature of partnership under English law or Indian law, cannot be taken in applying law of income-tax." Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326, stated at page 331: " first question is whether firm is separate assessable entity for purposes of Act or whether it is only compendious term used to denote group of partners. definition of'dealer' takes in three categories of assessable units, namely, person, firm or Hindu joint family. substantive and procedural provisions of Act prescribe mode of assessment and realisation of tax assessed on such dealer. If we read expression'firm' in substitution of word'dealer', it will be apparent that firm is independent assessable unit for purposes of Act. Indeed, firm has been given same status under Act as is given to it under Income-tax Act. Under section 3 of Income-tax Act also, a'firm' is treated as unit of assessment and as distinct assessable entity. Though under partnership law, firm is not legal entity but only consists of individual partners for time being, for tax law, income-tax as well as sales tax, it is legal entity." Whether same set of partners constituting two different firms can be treated as one firm or as two separate assessable units or entities for purpose of General Sales Tax Act came up for decision before Division Bench of this court in Dy. Commr. of Sales Tax v. Kelukutty [1978] 42 STC 108. Following decision of Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326, this court held that although in partnership law, firm is not legal entity but consists of only persons who are partners for time being, as far as tax law both income-tax and sales tax is concerned, it is legal entity, and affirmed view expressed by Tribunal that in law same persons constituting two different partnerships must be regarded as two separate persons or assessable units for purpose of assessment under General Sales Tax Act. For aforesaid reasons, we answer reference in negative, i.e., in favour of assessee and against Revenue. copy of this judgment under seal of court and signature of Registrar will be forwarded to Income-tax Appellate Tribunal, Cochin Bench. *** COMMISSIONER OF INCOME TAX v. C.A. OUSEPH & SONS