TaxTMI 
TaxTMI 
1985 (8) TMI 3
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....ented their respective families. The firm carried on business in textile goods and in due course acquired substantial properties out of contributions made by the two Hindu undivided families. In 1950, a separate retail shop by name Premier Cloth Stores was opened at Katni by the firm. Similarly, in 1953-54, a branch was opened at Satna for handling cloth business. On November I, 1956, under a partnership deed, the Satna business was taken over by a firm consisting of three partners, namely, Dhanyakumar, Jaykumar and Abhaykumar, and the partnership was deemed to have begun from September 9, 1956. Prasannakumar was admitted to the benefits of the partnership as he was then a minor and the firm's business at Satna was run in the name of Savai Singhai Ratanchand Darbarilal. On April 1, 1957, under a separate deed, the business at Katni, both the main as also the branch, were taken over by a firm of four partners, viz., Dhanyakumar, Jaykumar, Abhaykumar and Keshavkumar. In the partnership deeds of Satna and Katni, there was no reference to the business at the other place. Separate applications for registration of the two firms in the assessment year 1958-59 were made. The ITO rejected b....
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.... convert the Satna business into a branch of the Katni business. Similarly, intimation to the banks was not decisive of the matter especially when the existing intimation did not run counter to the constitution of the Satna firm as claimed. The name of Satna business was not changed and the partner who had authority to operate continued to be a partner in that business. The only remaining consideration was about the introduction of capital. Assuming that it was done in a clumsy manner, we do not see how it can jeopardise the claim of Satna business to be independent. The new entrants, namely, Dhanyakumar (perhaps Keshavkumar) and Prasannakumar could well have been partners admitted to the benefits of partnership without introducing any capital at all. We are, therefore, of the view that the objections raised by the income-tax authorities to the Satna business being converted into an independent entity are not strong or sufficient to justify the rejection of the assessee's claim. The Satna business has, therefore, to be taken as an independent unit with its own constitution. The firm running that business has been constituted under a partnership deed with well-defined terms and cond....
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....n is what was referred by the Tribunal under s. 66(1) of the Act for the opinion of the court. The additional questions would lose their importance and turn out to be academic once the main question is answered one way or the other. Whether a firm is genuine or not is a question of fact as was pointed out by this court in Ladhu Ram Taparia v. CIT [1962] 44 ITR 521, and it is for the Tribunal to reach a final finding on such question. As a fact, in this case, the Tribunal has reached such a finding. Before the High Court, this finding has been assailed on the ground that the Tribunal did not take into account all aspects on record while deciding the issue and acted on irrelevant material in reaching this factual conclusion. The High Court referred to several decisions of this court mainly among them five being Dhirajlal Girdharilal v. CIT [1954] 26 ITR 736, Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28, Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271, CIT v. Sivakasi Match Exporting Co. [1964] 53 ITR 204 and CIT v. Jain [1973] 87 ITR 370, in support of the proposition that where the Appellate Tribunal had misdirected itself in its approach, overlooked salient features and eviden....
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....when the existing information did not run counter to the constitution of the Satna firm as claimed. The question of introduction of capital also received special consideration in the hands of the Tribunal. On the basis of the material placed and available on the record, the Tribunal did reach the conclusion that the Satna business was an independent one with its own constitution and the firm had been constituted under a deed with well-defined terms and conditions. A further finding was recorded that the constitution of the Satna firm was different from the constitution of the firm controlling the Katni business. The Tribunal recorded a further finding that the profits had been divided in accordance with the provisions of the partnership deed and appropriate entries in the books of account had been made. The explanation regarding the change in the date which had been adversely commented upon by the AAC appears also to have been reconsidered by the Tribunal and the Tribunal came to the conclusion that there was nothing clandestine about it. We are told by Mr. V.S. Desai, learned counsel for the assessee-appellant, that the accounts were maintained in the local language and according ....