Common partners may form separate firms for different businesses; whether one firm or two depends on facts.

Common partners are not legally barred from constituting separate firms for different businesses under the Indian Income-tax Act, because the Act treats a firm as a distinct taxable unit and permits different firms to exist if the facts support that arrangement; the Tribunal's contrary observation was treated as obiter. Whether two businesses carried on by the same persons amount to one firm or two firms depends on the concrete facts, including the manner of carrying on the businesses and the intention behind the arrangement, so the issue is not a pure question of law. The matter therefore turns on factual determination on the evidence.

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Issues: (i) Whether common partners can constitute two separate firms in respect of different businesses carried on by them for the purposes of the Indian Income-tax Act. (ii) Whether the question whether there were two firms or only one firm is a question of fact.

Issue (i): The ordinary law treats a firm as a compendious description of its partners, but the Indian Income-tax Act recognises a firm as a distinct taxable unit. That statutory treatment leaves room for the same partners to constitute different firms for different businesses, if the facts support that conclusion. The earlier observation relied upon by the Tribunal was treated as obiter and not as a binding rule preventing such an arrangement.

Conclusion: Common partners can in law constitute two separate firms for different businesses under the Indian Income-tax Act.

Issue (ii): Whether two businesses carried on by the same persons amount to one firm or two firms depends on the concrete facts, including the manner in which the businesses are carried on and the intention underlying the arrangement. The existence of separate firms is therefore not a pure question of law.

Conclusion: The question whether there were two firms or only one firm is a question of fact.

Final Conclusion: The legal position favoured recognition of separate firms in law, and the matter required factual determination on the evidence before the Tribunal.

Ratio Decidendi: For income-tax purposes, common partners are not legally barred from constituting separate firms for different businesses, and the issue whether a given set of businesses constitutes one firm or more than one is a question of fact.

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