TaxTMI 
TaxTMI 
2000 (9) TMI 249
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....rtners:-- --------------------------------------------------------------------------------- (i) Shri Nathu Z. Attarde 65% 48 years. (ii) Shri Dinesh N. Attarde 35% 19 years. --------------------------------------------------------------------------------- As per clause 8 of this deed, Nathu Attarde was to manage the affairs of the business and signed all the documents. Bank A/c was also to be operated by him alone. The capital of Rs. 15,000 introduced by Dinesh Attarde came out of the amount gifted to him by his father Shri Nathu Attarde. This firm underwent constitutional changes vide partnership deed dated 20-10-1971 as under:-- --------------------------------------------------------------------------------- (i) Nathu Attarde &nb....
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....p; 45% (iii) Sudhakar Attarde 45% --------------------------------------------------------------------------------- Clause 9 of this deed still provided that Nathu Attarde would operate bank A/c and to collect cheques from Government and semi-government organisations. Since then, the constitution of partnership remains the same. 3. Now we take up the case of the Rural Agencies. This firm came into existence under the partnership dated 5-4-81 having the following constitution:-- --------------------------------------------------------------------------------- (i) Nathu Attarde 10% (ii) Smt. Lathika Dinesh Attarde 45% (iii) Smt. Kalpana Sudhakar Attarde &....
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....ent could be made in the status of body of individuals on the basis of return filed by the registered firm in view of Bombay High Court decision in CIT v. Associated Cenent & Steel Agencies [1984] 147 ITR 776. At the best, the Assessing Officer could have treated the firm as URF. But, for assessing it in, the status of BOI, separate proceedings should have been initiated by the Assessing Officer. 5.2 Regarding refusal of registration, it was noticed by him that these firms were allowed registration in the past and there was no finding that any partner was benamidar of the other. The mere fact that first the partner gifted money which was introduced as capital by other partner and the fact that the first partner operated Bank A/c did not establish that two partners were benamidars of the first partner. According to him, something more is required i.e., fruits of business must be enjoyed by the first partner. Since there was no material to establish the same, it could not be said that first partner was benamidar of the other partners. Accordingly, it was held by him that partnerships were valid partnerships and registration could not be refused. Aggrieved by the same, the Revenue ....
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....s claimed that there arc two partnership firms and not on constituted by the same persons and carrying on different businesses, the assessing authority must test the claim in the light of the partnership law. 4. It is only after that question has been first determined, namely, whether in law there is only one partnership firm or two partnership firms, that the next question arises, viz., whether the turnover is assessable in the hands of the partnership firm as a taxable entity, separate and distinct from the partners. There is first a decision under the law of partnership; thereafter, the second question, the question as to assessment, arises under the tax law." 8. Now, it is also well settled legal position that if the Income-tax Officer finds on investigation that a number of firms carrying on business under different firm names really belong to one and same group of persons, he can refuse to register these firms under the Income-tax Act and treat the aggregate income of all the firms as income of this group of persons. Further, the Income-tax Authorities are not bound to register a firm merely because the firm has been registered as such under the Partnership Act. Referen....
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....ttarde. This objection of the Assessing Officer cannot be approved in the light of Supreme Court judgment in the case of K.D. Kamath & Co. According to the provisions of Indian Partnership Act, 1932, the control and management of the business can be vested in one partner by the agreement as held by the Supreme Court in the above case. The other objection of the Assessing Officer is that capital by other partners was supplied by Shri Nathu Attarde. This objection, in our opinion, is also not of relevance since there is no requirement in section 4 of the Indian Partnership Act, 1932 that each partner must contribute capital. Reference can be made to Madras High Court decision in the case of A.M. Abdul Rahman Rowther & Co. v. CIT [1965] 56 ITR 556, relied upon by the ld. counsel for the assessee before the CIT(A). Accordingly, it is held that both these partnership firms were validly constituted in law. 11. Now the only question which remains to be considered is whether the same business is carried on by both the firms or both the firms were controlled by the same group of persons. This aspect has to be decided on the facts of the case by applying the test of interlacing or inte....
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....overnment. It has been found that each of the firms had been considerably financed by the other firm. It is noteworthy that almost the same outside parties had financed the aforesaid firms, namely, I to VI. On analysing the trading account of the various firms it is found that huge purchase have been made from and huge sales have been made to allied concerns (excepting for firm Nos. V and VI which did handling of agency work under the Government of Bengal). It appears that the goods had been shifted from one concern to another and only a divided portion of profits is actually shown by each of the firms. It is further found that most of the outside parties to whom goods had been sold and from whom goods had been purchased were the same for each of the firms I, II, III and IV. Other points of striking similarity, viz., (a) the businesses of the firms had been carried on nearly at same place, (b) the rent register produced by the landlord of the premises showing that the rent of all the firms had been paid in most cases on the same date during the month, (c) goods had been insured with the same company, viz., Jupiter General Insurance Co. Ltd., are also noticed." Further, the Supre....