TaxTMI 
TaxTMI 
1984 (4) TMI 116
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....mandi committee was constituted at Daulatganj, Ujjain, as well. It was contended that in order to give effect to the provisions of the said Act, the mandi committee had decided that a pucca arhatia would not carry on business of a kutcha arhatia and kutcha arhatia had to be separately licensed. The functioning of kutcha arhatias was authorised from 27-1-1975 and the kutcha arhatia association passed a resolution on 25-1-1975 that the business as kutcha arhatia would start from 27-1-1975 and every member of the kutcha arhat association should make necessary arrangements. In pursuance of this, a new firm, Oswal Trading Co. was created. The old firm, Ghasiram Kaluram, consisted of four partners, viz., Smt. Chandbai, Maneklal, Rajendrakumar and Subhashchand. All the three male partners are real brothers and Smt. Chandbai is their mother. The new firm, Oswal Trading Co. (the appellant in the other set of appeals), was created with effect from 27-1-1975 and consisted of three partners, namely, Subhashchand, Smt. Premkumari and Smt. Kusumkumari. Subhashchand is one of the partners in the old firm, Ghasiram Kaluram, and Smt. Premkumari and Kusumkumari are the wives of the other two partner....
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....lants and the learned departmental representative and have given our careful consideration to the issues involved. The main issue in this case is whether the firm, Oswal Trading Co., was an independent firm and not merely another name of Ghasiram Kaluram and even if it was a separate firm, whether it was a genuine firm and whether it should have been registered by the ITO ? The other grounds, as mentioned above, are merely consequential and their decision would depend upon the result of the main controversy. 6. In holding that the firm, Oswal Trading Co., is not a genuine firm and is only another name adopted by Ghasiram Kaluram for carrying on a part of its business, the ITO relied upon the following circumstances : (1) that the same persons were beneficially interested in both the firms ; (2) that the business of both the firms was the same ; (3) that the finances and management of both the firms were common ; (4) that the business premises of both the so-called firms were common and (5) that there were common accounts. 7. Except the facts that the two firms had no separate business premises and were carrying on business in the same premises belonging to the ....
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....ccount of regular trade dealings as would happen between two independent concerns dealing with each other. 9. As already stated, it is admitted that the ladies are not taking any active interest in the business of the firm and are so-called sleeping partners. It was not even asserted that the two ladies, Premkumari and Kusumkumari wanted to start arhat business and therefore, they entered into a partnership with Subhashchand for that purpose. No initiative was alleged or shown to have come from these ladies, who, at the most, appeared to have lent their names at the instance of their husbands. Why a firm in the name of Oswal Trading Co. was put up is very relevant and that gives us the clue about the real nature of this so-called independent firm. It was vehemently contended before us on behalf of the appellants that after the establishment of the market committee under the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, a pucca arhatia could not work as a kutcha arhatia and, therefore, in face of that situation the only option before the firm, Ghasiram Kaluram, was either to close down that line of business or to indulge in illegal transactions in contravention of the provisions of....
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....actions were initially noted in a common book and were ledgerised in separate books later on. The ITO recorded the statement of Maneklal as well and after sustained questioning, Maneklal had to admit that there was no separate cash box for Oswal Trading Co. Earlier, he had tried to pretend that the cash box and accounts of Oswal Trading Co. were in another almirah kept nearby. When that almirah was opened, it contained some old and miscellaneous papers and registers of both the firms and some personal papers about life insurance, etc. On opening that almirah further showed that it was not in regular use. Although a day earlier Subhashchand had stated that Ghasiram Kaluram was doing kutcha arhat business as well, Maneklal contradicted it and said that Ghasiram Kaluram did only pucca arhat business. As was vehemently contended before us, the necessity for floating a new firm arose because the same persons could not do kutcha arhat as well as pucca arhat business. If Ghasiram Kaluram was not doing kutcha arhat business earlier, there was nothing for them to worry by the new regulations as they would not affect them in any manner whatsoever. The fact that they were worried and the argu....
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....ol and management, conduct of business through the same agency, the inter-relation of the business, the employment of the same staff to run the business and the nature of the different transactions. If we look at the facts of the present case in the light of the observations in this ruling, we find that there is unity of control and management in the two appellants. The business of both the appellants is being carried on through the same persons, the finances are interlocked and the nature of the business is supplementary to each other. In other words, they are two limbs of the same business. In Dhanji Lalji v. CIT [1977] 107 ITR 395 (Bom.), one DL was doing business as sole proprietor with two of his relations as his servants. The business was converted into partnership purporting to take the two servants as partners. On the circumstances of the case, it was held that no genuine partnership had come into existence. It was observed that each one of the circumstances taken by itself might not be sufficient to lead to an inference about the non-genuineness of the firm but that did not mean that taking all the circumstances and factors cumulatively such an inference can never be drawn....
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....entered into a partnership and constituted a financing corporation B. The eight ladies withdrew Rs. 1,16,309 from the amounts standing to their credit in the old firm, while M, the male partner, withdrew Rs. 5,000 and invested in the new firm. Other amounts were also withdrawn and invested in the new firm from the old one and entries were made by mere book adjustments and no cash actually passed. It was held that the new firm was not a genuine firm. It was observed that the execution of a partnership deed is not by itself a talisman which can entitle a firm to be registered as, apart from the execution of the partnership deed, there must be circumstances and facts to show that it had come into existence and that it had carried on business. The mere fact, therefore, that a separate partnership deed was executed in the case before us between Subhashchand and the two ladies, does not provide any great advantage to the appellants and we have to look to the totality of the circumstances. 17. In view of the above discussion, we agree with the findings recorded by the authorities below that the firm, Oswal Trading Co., was not a genuine firm and it was merely an alias of Ghasiram Kalur....