Ravula Subba Rao & ANR Vs. The
Commissioner of Income-Tax., Madras  INSC 42 (9 May 1956)
AIYYAR, T.L. VENKATARAMA DAS, SUDHI RANJAN
(CJ) BHAGWATI, NATWARLAL H.
CITATION: 1956 AIR 604 1956 SCR 577
Indian Income Tax Act, 1922 (Act XI of 1922),
ss. 26-A, 59, Rules 2 and 6 framed under s. 59-Word 'personally' in the Rules
Whether excludes a duly authorised agent from signing an application on behalf
of the partner under s. 26-A-Rules 2 and 6-Whether ultra vires the rule-making
authority-Indian Income Tax Act, 1922 -Whether exhaustive of the matters dealt
Rules 2 and 6 of the Rules framed under s. 59
of the Indian Income Tax Act provide that an application for registration of a
firm under s. 26-A of the Act and for renewal of registration certificate
"shall be signed personally by all the parties".
Held that the word 'personally' in the Income
Tax Rules, as framed under s. 59 of the Income Tax Act would exclude a duly
authorised agent of a partner of a firm signing an application on behalf of the
partner under s. 26-A of the Income Tax Act.
(2) That Rules 2 and 6 are not ultra vires
the rule-making authority.
To decide the question whether on its true
interpretation the Indian Income Tax Act intended that an application under s.
26-A should be signed by the partner personally, or whether it could be signed
by his agent on his behalf the Court must have regard not only to the language
of s. 26-A but also Lo the character of the legislation, the scheme of the Act
and the nature of the right conferred by the section.
The Indian Income Tax Act is a self-contained
code exhaustive of the matters dealt with therein, and its provisions show an
intention to depart from the common rule, qui facit per alium tacit per se. Its
intention again is that a firm should be given benefit of s. 23(5)(a), only if
it is registered. under s. 26-A in accordance with the conditions laid down in
that section and the rules -framed thereunder. And as those rules require the
application to be signed by the partner in person, the signature by an agent on
his behalf is invalid.
Commissioner of Agricultural Income-tax v.
Keshab Chandra Mandal, ( S.C.R. 435), relied upon.
commissioner of Income-tax v. Subba Rao, (
I.L.R. Mad. 167) approved.
Other case-law referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 56 & 57 of 1954.
Appeal from the judgment and order dated the
25th day v of March 1951 of the Madras High Court in Case Referred Nos. 32 of
1948 and 31 of 1950.
K.S. Krishnaswami Iyengar, (K. R. Choudhry,
with him) for the appellants.
G.N. Joshi and P. G. Gokhale, for, the
1956. May 9. The Judgment of the Court was
delivered by VENKATARAMA AYYAR J.-The appellant is a firm which was constituted
under a deed of partnership dated 10-2-1941, and consists of two partners,
Subba Rao and Hariprasada Rao. On 21-3-1942 it was registered under section
26-A of the Indian Income Tax Act No. XI of 1922, hereinafter referred to as
the Act, for the assessment year 1942. Sometime thereafter, one of the
partners, Subba Rao, is stated to have left on a long pilgrimage, and the
affairs of the partnership were then managed by Hariprasada Rao as his agent
under a general power-of-attorney dated 1-7-1940. Hariprasada Rao then applied
under rules 2 and 6 of the rules framed under section 59 of the Act, for
renewal of the registration certificate for the year 1942-43, and the
application was signed by him for himself and again as the attorney of Subba
Rao. Those rules provide that an application for registration of a firm under
section '26-A and for renewal of registration certificate "shall be signed
personally by all the partners"'. The Income-tax Officer rejected the
application for renewal on the ground that it was not personally signed by one
of the partners, Subba Rao, and that the signature of Hariprasada Rao as his
agent was not valid The order was taken in appeal, and was ultimately the
subject of a reference under section 66(1) of the Act to the High Court of
Madras, which held that the word "personally" in rule 6 required that
the partner 579 should himself sign the application, and that the principles of
agency under the -general law were exclude. (Vide Commissioner of Income-tax v.
While these proceedings were pending,
Hariprasada Rao filed the two applications, out of which the present appeals
arise, for renewal of the registration certificate for the assessment years
1943-44 and 1944-45. Both of them were signed by him for himself and as
attorney for Subba Rao. At the hearing of these petitions the appellant, apart
from maintaining that rules 2 and 6 did not, on their true construction,
exclude signature by an agent on behalf of a partner, raised a further
contention that the rules themselves were ultra vires the powers of the
rulemaking authority. The Income-tax Officer overruled both these contentions,
and rejected the applications, and his orders were confirmed on appeal by the
Appellate Assistant commissioner and then by the Appellate Tribunal.
Thereafter, on the application of the
appellant, the Tribunal referred the following questions for the decision of
the High Court:
"(1) Whether the word 'personally' in
the Income-tax Rules, as framed under section 59 of the Income-tax Act would
exclude a duly authorised agent of a partner from signing an application on
behalf of the partner under section 26-A of the Income-tax Act? (2)If the
answer to the above question is in the affirmative, whether rules 2 and 6 are
ultra vires the rule making authority?" The reference was heard by
Satyanarayana Rao and Viswanatha Sastry, JJ. Following the decision in
Commissioner of Income-tax v. Subba Rao(1), they answered the first question in
the affirmative. On the second question, however, they differed. Satyanarayana
Rao, J. held that the rules were ultra vires, and that the applications were in
order, and ought to have been granted. Viswanatha Sastry, J. was of the
contrary opinion, and held that the rules were intra vires, and that the applications
were properly (1) I.L R. (1947) Mad. 167; 1946 I.T.R. 232.
580 rejected as not being in accordance with
them. The learned Judges, however, granted a certificate under section 66-A of
the Act, and that is how the appeals come before us.
The first question whether the word
"personally" would exclude signature by an authorised agent on behalf
of the partner was answered in the affirmative by the Madras High Court in
Commissioner of Incometax v. Subba Rao(1). This was one of the decisions quoted
with approval by this Court in Commissioner of Agricultural Income-tax v.
Keshab Chandra Mandal(2), where the question was whether a rule framed under
the Bengal Agricultural Income-tax Act that the declaration in the return
should be signed by the individual himself required that he should sign it
personally, and it was held that it did so require. Sri K. S. Krishnaswami
Ayyangar, learned counsel for the appellant, did not urge any grounds for
differing from the above conclusion, and we must therefore hold, in agreement
with the views expressed in the above decisions, that the signature which is
prescribed by the rules is that of the partner himself, and that they are not
complied with by the agent signing on his behalf.
Then we come to the second question-and that
is the substantial question that arises for our determination in this
appeal-whether rules 2 and 6 are ultra Vires the rulemaking authority. The
argument of the appellant in support of its contention that the rules are ultra
Vires may thus be stated: Under the common law of England, a person has the
right to do through an agent whatever he can do himself, and that right has
also been conferred on him in this country by section 2 of the
Powers-of-Attorney Act VII of 1882, which runs as follows:
"The donee of a power-of-attorney may,
if he thinks fit, execute or do any assurance, instrument or thing in and with
his own name and signature, and his own seal, where sealing is required, by the
authority of the donor of the power; and every assurance, (1) I.L.R. 1947 Mad.
167:1946 I.T.R. 232.
(2)  S.C.R. 435.
581 instrument and thing so executed and
done, shall be as effectual in law as if it had been executed or done by the
donee of the power in the name, and with the signature and seal, of the donor
thereof "This section applies to powers-of-attorney created by instruments
executed either before or after this Act comes into force".
Section 26-A of the Act confers on a partner
the right to apply for registration of the firm, and that right could be
'exercised both under the common law and under section 2 of the
Powers-of-Attorney Act through an authorised agent. The sovereign legislature
might, if it so chooses, abrogate the rule of common law, and repeal section 2
of the Powers-ofAttorney Act,. and enact that the application to be presented
under section 26-A should be signed by the partner himself and not by any other
person; but it has not done so either expressly or by necessary implication,
and, therefore, the application which was signed by Hariprasada Rao is as good
as if it had been signed by Subba Rao. The Rules no doubt require that the
signature should be that of the partner and not that of' his agent. But in
prohibiting what would be lawful under the section, the Rules go beyond the ambit
of the authority conferred by section 26-A on the rule-making authority, which
is limited to framing Rules for giving effect to the principles laid down in
They are therefore ultra vires. In the
alternative, assuming that the mandate given to the rule-Making authority under
section 26-A is of sufficient amplitude to authorise the making of the Rules in
question, even then, they must be held to be ultra vires, as they have the
effect of abrogating the common law and of repealing section 2 of the
Powers-of-Attorney Act, which confer on a person the right to act through an
agent, and that being a legislative function cannot be delegated to a
rule-making authority. and section 26-A, if it is to be construed as conferring
such power on an outside authority, must be struck down as constituting an
unconstitutional delegation by the legislature of its legislative function.
It is the correctness of these contentions, that
now falls to be considered.
According to the law of England-and that is also
the law under the Indian Contract Act, 1872-"every person who is sui juris
has a right to appoint an agent for any purpose whatever and that be can do so
when he is exercising a statutory right no less than when he is exercising any
other right". Per Stirling, J. in Jackson and Co. v. Napper: In re
Schmidts' Trade-Mark(1). This rule is subject to certain well-known exceptions
as when the act to be performed is personal in character, or is annexed to a
public office, or to an office involving fiduciary obligations. But apart from
such exceptions, the law is well settled that whatever a person can do himself,
he can do through an agent. It has accordingly been held that "at common
law., when a person authorizes another to sign for him, the signature of the
person so signing is the signature of the person authorizing it". Per
Blackburn, J. in The Queen V. Justices Of Kent (").
The appellant is therefore right in his
contention that unless the statute itself enacts otherwise, an application
which a partner has to sign would be in order and. valid, if it is signed by
his authorised agent. The question then is whether there is anything in the
Act, which requires that an application under section 26-A should be signed by
the party personally.
Section 26-A is as follows:
"(I) Application may be made to the
Income tax Officer on behalf of any firm, constituted under an instrument of
partnership specifying the individual shares of the partners, for registration
for the purposes of this Act and of any other enactment for the time being in
force relating to income-tax or super-tax.
(2) The application shall be made by such
person or persons, and at such times and shall contain such particulars and
shall be in such form, and be verified in such manner, as may be prescribed;
and it shall (1)  35 Ch. D. 162, 172.
(2) [1872-73] L.R. 8 Q.B. 305, 307.
583 be dealt with by the Income-tax Officer
in such manner as may be prescribed".
The section does not, it should be noted,
provide that the application for registration should be signed by the partner
personally, and it is this that forms the foundation of the contention of the
appellant that the right which a person has under the general law and under
section 2 of the Powersof-Attorney Act to act through an agent has not been
taken away or abridged by the section. He relies in support of his contention
on the following rules of construction:
(1) Statutes which encroach on the rights of
a subject should be interpreted if possible so as to respect such rights. [Vide
Maxwell on Interpretation of Statutes, 10th Edition, page 285; Craies on
Statute Law,, 5th Edition, pages Ill to 114). The law is thus stated by Lord
Justice Bowen in re Cuno: Mansfield v. Mansfield(1):
"In the construction of statutes, you
must not construe the words so as to take away rights which already existed
before the statute was passed, unless you have plain words which indicate that
such was the intention of the legislature".
(2)In the absence of clear and unambiguous
language, an intention to alter the existing law should not be imputed to the
legislature. (Vide Craies on Statute Law, 5th Edition, pages 114 and 115).
(3)The law does not favour repeal of a
statute by implication, and therefore a later statute should not be construed
as repealing an earlier one without express words or by necessary implication.
(Vide Maxwell on Interpretation of Statutes, 10th Edition, page 170;. Craies on
Statute Law, 5th Edition, page. 337).
"If it is possible", observed
Farwell, J., "it is my duty so to read the section as not to effect an
implied repeal of the earlier Act": Be Chance(2).
"Unless two Acts are so plainly
repugnant to each other, that effect cannot be given to both at the same time,
a repeal will not be implied". Per A. L. Smith, J. in Kutner v.
(1)  43 Ch. D. 12, 17.
(2)  1 Ch. 266, 270.
(8)  2 Q.B. 267, 272.
584 In the light of these principles, -it is
contended that the true scope of section 26-A is that it confers a right on a
partner to register the firm, and leaves the modus of the exercise thereof to
be regulated by the existing law, and that, therefore, far from showing an
intention either to alter the general law as to the right of a person to act
through his agent or to repeal section 2 of the Powers-ofAttorney Act, the
section depends on their continued operation for its implementation.
Now, the rules of construction on which the
appellant relies are well-established. But then, it should not be overlooked
that they are only aids to ascertain the true intention of the legislature as
expressed in the statute., and the question ultimately is, what in the context
do the words of the enactment mean? The following passage from Crawford on
"The Construction of Statutes", 1940 Edition, page 454 cited by the
appellant may be usefully referred to in this connection:
"Why should a statute be subjected to a
strict or a liberal construction, as the case may be? The only answer that can
possibly be correct is because the type of construction utilized gives effect
to the legislative intent. Sometimes a liberal construction must be used in
order to make the legislative intent effective., and sometimes such a
construction will defeat the intent of the legislature. If this is the proper
conception concerning the rule of construction to be adhered to, then a strict
or a liberal construction is simply a means by which the scope of a statute is
extended or restricted in order to convey the legislative meaning. If this is
the proper position to be accorded strict and liberal constructions, it would
make no difference whether the statute involved was penal, criminal, remedial
or in derogation of common right, as a distinction based upon this
classification would then mean nothing".
That being the correct position, the question
is whether on its true interpretation, the statute intended that an application
under section 26-A should be' signed by the partner personally, or whether it
could 585 be signed by his agent on his behalf To decide that, we must have
regard not only to the language of section 26-A but also to the character of
the legislation, the scheme of the Act and the nature of the right conferred by
The Act is, as stated in the preamble, one to
consolidate and amend the law relating to income-tax. The rule of construction
to be applied to such a statute is thus stated by Lord Herschell in Bank of
England v: Vagliano (1):
"I think the proper course is in the
first instance to examine the language of the statute, and to ask what is its ,
natural meaning, uninfluenced by any considerations derived from the previous
state of the law and not to start with inquiring how the law previously stood,'
and then, assuming that it was probably "intended to leave it
unaltered............................" We must therefore construe the
provisions of the Indian Income-tax Act as forming a code complete in itself
and exhaustive of the matters dealt with therein, and ascertain what their true
Turning then to the provisions of the Act,
considerable light is thrown on their true import by the decision of this Court
in Commissioner of Agricultural Income-tax v. Keshab Chandra Mandal(2). There,
the question was as to the meaning of Rule I 1 framed under the Bengal
Agricultural Income-tax Act, 1944 read with Form No. 5, which required that the
declaration in the return should be signed "in the case of an individual,
by the individual himself". It was held by this Court on a review of the
provisions of the statute that the intention of the legislature as expressed therein
was to exclude the common law rule, qui facit per alium facit per se, and the
declaration to be valid must be signed by the assessee personally. It is argued
for the appellant that Commissioner of Agricultural Income-tax v. Keshab
Chandra Mandal(2) was a decision only on the interpretation of Rule No. 11 and
not on its validity, and that the question whether the rule was ultra vires or
not was not in issue. That is so, but the materiality of the (1)  A.C.
107, 141. (2)  S.C.R. 435, 76 586 decision to the present controversy
lies in this that the interpretation which was put on Rule 11 as requiring
personal signature was based on the conclusion which this Court reached on a
consideration of the relevant provisions of the Bengal Agricultural Income-tax
Act that the intention of the legislature was to exclude the rule of the common
law on the subject. Now, the provisions of the Bengal Act which were construed
in Commissioner of Agricultural Income-tax v. Keshab Chandra Mandal(1) as
indicative of the above intention, are identical in terms with the
corresponding provisions in the Indian Income-tax Act, and are, in fact, based
on them and it would therefore be logical to construe the latter as expressing
an intention to discard the rule of common law on the subject.
The relevant provisions of the Bengal
Agricultural Income tax Act may now be noticed. Section 25(1) of the Bengal Act
provides that if. the Income-tax Officer is not satisfied that the return made
is correct and complete, he may require the assessee by notice either to attend
at the Income-tax office or-to produce or cause to be produced any evidence on
which he might rely. This corresponds to section 23(2) of the 'Indian
Income-tax Act. The point to be noted with reference to this section is that it
contains an express provision for production of evidence by the assessee
through his agent, a provision which would have been wholly unnecessary if the
common law was intended to apply.
Sections 35 and 36 of the Bengal Act contain
provisions as to who can represent the assessee and in what proceedings, and
they follow section 61 of the Indian Income-tax Act and form a code complete in
themselves. Then again, both the Bengal Act and the Indian Income-tax Act
provide that certain provisions of the Civil Procedure Code are applicable to
the proceedings under the Act. The provisions of Order 3 of the Civil Procedure
Code enacting that parties may appear and act through recognised agents are not
among them. To cut the discussion short, the effect of the provisions of the
(1)  S.C.R. 435.
587 Bengal Act is thus summarized in
Commissioner of Agricultural Income-tax v. Keshab Chandra Manda`(1):
"The omission of a definition of the
word 'sign' as including a signature by an agent, the permission under section
25 for production of evidence by an agent and under sections 35 and 58 for
attendance by an agent and the omission of any provision in the Act applying
the provisions of the Code of Civil Procedure relating to the signing and
verification of pleadings to the signing and verification of the return while
expressly adopting the provisions of that Code relating to the attendance and
examination of witnesses, production of documents and issuing of commission for
examination and for service of notices under sections 41 and 60 respectively,
cannot be regarded as wholly without significance".
This reasoning applies with equal force to
the provisions of the Indian Income-tax Act, and goes far to support the
contention of the respondent that the common law is not intended to apply to
proceedings under the Act.
Another factor material for the determination
of this question is the nature of the right conferred by section 26A. Under the
common law of England, a firm is not a juristic person, the firm name being
only a compendious expression to designate the various partners constituting
it. But, as pointed out by this Court in Dulichand Laxminarayan v. Commissioner
of Income-tax, Nagpur(2), inroads have been made by statute s into this
conception, and firms have been regarded as distinct entities for the purpose
of those statutes. One of those statutes is the Indian Income Tax Act, which
treats the firm as a unit for purposes of taxation. Thus, under section 3 of
the Act the charge is imposed on the total income of a firm, the partners as
such being out of the picture, and accordingly under section 23 of the Act, the
assessment will be on the firm on its total profits. Section 23(5) enacts an
exception to this in the case of firms registered under the Act, and provides
that, "(a)........ the sum payable by the firm it seIf shall (1) 
(2) A.I.R. 1956 S.C. 354.
588 not be determined but the total income of
each partner of the firm, including therein his share of its income, profits
and gains of the previous year, shall be assessed and the sum payable by him on
the basis of such assessment shall be determined".
Thus, if a firm is registered, it ceases to
be a unit for purposes of taxation and the profits earned by it are taken, in
accordance with the general law of partnership, to have been earned by the
individual partners according to their shares, and they are taxed on their
individual income including their share of profits. The advantages of this
provision are obvious. The rate of tax chargeable will not be on the higher
scale provided for incomes on the higher levels but on the lower one at which
the income of the individual partner is chargeable. Thus, registration confers
on the partners a benefit to which they would not have been entitled but for
section 26-A, and such a right being a creature of the statute, can 'be claimed
only in accordance with the statute which confers it, and a person who seeks
relief under section 26-A must bring himself strictly within its terms before he
can claim the benefit of it. In other words, the right is regulated solely by
the terms of the statute, and it would be repugnant to the character of such a
right to add to those terms by reference to other laws. The statute must be
construed as exhaustive in regard to the conditions under which it can be
Thus, considering the question with reference
to the character of the legislation, the scheme of the statute and the nature
of the right conferred by section 26-A, the conclusion is irresistible that
rules of common law were not intended to be saved, and that the right to apply
for registration. under that section is to be determined exclusively by
reference to the prescriptions laid down therein. If that is the true
construction, in authorising the rule-making authority to frame rules as to who
can apply for registration under section 26-A, and when and how, the -statute
has. merely directed that authority to fill in details in the field of
legislation occupied by it, and it is not denied that Rules a and 6 are within
the mandate conferred 580 by the section. In this view, section 59 (5) of the
Act which enacts that "Rules made under this section shall be published in
the official Gazette, and shall thereupon have effect as if enacted in this
Act" directly applies, and the vires of the Rules is beyond question. Vide
the observations of Lord Herschell in Institute of Patent Agents v.
Then, there is the contention of the
appellant that the Rules in question are repugnant to section 2 of the Powers of-Attorney
Act VII of 1882, and are therefore ultra wires.
In addition to the reasons given above in
support of the conclusion that the rule of the common law was not intended to
operate in the field occupied by section 26-A, there is a further and a more
compelling reason why this contention should not be accepted. It is that there
is, in fact, no conflict between the two statutory provisions. To understand
the scope of section 2 of the Powers-of Attorney.
Act, it is necessary to refer to the history
of this legislation. Under the common law of England, an agent having authority
to execute an instrument must sign in the name of the principal if he is to be
bound. If the agent signs the deed in his name albeit as agent, he is the
person who is regarded as party to the document and not the principal.., It is
the agent alone that can enforce the deed, and it is be that will be liable on
it. Vide In re International Contract Company(2); Schack v. Antony(3),
Halsbury's Laws of England, 3rd Edition, Volume 1, page 217, and Bowstead on
Agency, 10th Edition, page 93. To remove the hardships resulting from this
state of the law, the Conveyancing and Law of Property Act, 1881 (44 and 45,
Vict, Chapter 41) enacted section 46, which is as follows:
"(1) The donee of a power of attorney
may, if he thinks fit execute or do any assurance, instrument, or thing in and
with his own name and signature and his own seal, where sealing is required, by
the authority of the donor of the power; and every assurance, instrument, and
thing so executed and done shall be (1)  A.C. 347, 351. (2)  6 Ch.
(3) I M. & S. 573; 105 E. R. 214.
590 as effectual in law, to all intents, as
if it had been executed or done by the donee of the power in the name and with
the signature and seal of the donor thereof (2) This section applies to powers
of attorney created by instruments executed either before or after the
commencement of this Act".
The Indian Legislature immediately followed
suit, and enacted the Powers-of-Attorney Act VII of 1882 incorporating in
section 2 therein word for word, section 46 of the English Act. The object of
this section is to effectuate instruments executed by an agent but not in
accordance with the rule of the common law and the enactment is more procedural
than substantive. It does not confer on a person a right to act through agents.
It presupposes that the agent has the authority to act on behalf of the
principal, and protects acts done by him in exercise of that authority but in
his own name. But where the question is as to the existence or the validity of
authority, the section has no operation. Thus., the fields occupied by the two
enactments are wholly distinct. Section 26-A says that a partner cannot
delegate the exercise of his rights under that section to an agent. Section 2
of the Powers-of-Attorney Act says that if there can be and, in fact there is,
delegation, it can be exercised in the manner provided therein. There is
accordingly no conflict between the two sections, and no question of repeal
To sum up, the Indian Income-tax Act is a
self contained code exhaustive of the matters dealt with therein, and its
provisions show an intention to depart fromthe common rule, qui facit per alium
facit per se. Its intention again is that a firm should be given benefit of
section 23(5) (a), only if it is registered under section 26-A in accordance
with the conditions laid down in that section and the rules framed there under.
And as those rules require the application to be signed by the partner in
person, the signature by an agent on his behalf is invalid.
In the view which we have taken, the further
question raised by the appellant that the power to repeal 591 a law being a
legislative function, can be exercised only by the legislature duly constituted
and not by any outside authority, and that the delegation of such a power to an
outside authority is unconstitutional., does not arise for decision.
In the result., we agree with Viswanatha
Sastry, J. that rules 2 and 6 are intra vires the powers of the rule-making
authority, and dismiss the appeals with costs.