TaxTMI 
TaxTMI 
1999 (3) TMI 64
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.... agreement dated April 1, 1980, was entered into not for doing business but only to facilitate transfer of the house property held by the firm formed under the deed of partnership dated June 8, 1979, to the limited company with a view to avoid payment of capital gains tax, the assessee is not entitled to registration under section 185(1)(a) of the Income-tax Act, 1961, for the assessment year 1981-82 ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal should have observed that the so called new firm which came into existence on April 1, 1980, had not carried on any business either during the year of account or in the subsequent accounting year and hence it cannot be said that there was 'lul....
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....uted firm was dissolved by a deed dated November 11, 1980, i.e., shortly after the accounting year was over and the entire business was taken over by the private limited company and the erstwhile partners were given equity shares. Thereafter, the private limited company continued to carry on the same business. During the assessment year in question, admittedly, the firm did not carry on the business excepting letting out the building owned by the firm for rent. The assessing authority refused the registration for the assessment year 1981-82 on the ground that no business was carried on during the year and that the object of entering into partnership with the private limited company and reconstituting the firm was only to enable the assets t....
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....ording to learned standing counsel. The appellate authority's order is described as perverse. The following facts are noted by the appellate authority : (1) The assessee-firm carried on business in cotton in the preceding year ; (2) During the previous year relevant to the assessment year 1981-82, the firm derived the income only from letting out the immovable property. (3) There was only a change in the constitution of the firm and the same firm which had previously five partners, continued the business with an additional partner... (5) The line of business mentioned in the partnership deed dated April 1, 1980, was the same as that carried on earlier. It was nowhere mentioned that the partnership business should be handed ov....
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....he parameters of perversity in approach. There is some force in the contention of learned standing counsel that the factum of not carrying on business during the relevant year must be viewed in the context of the decision of the partners to make over the assets and liabilities and the going business to the private limited company. But, the fact that the business was in fact not carried on is not conclusive, nor the fact that the dissolution did take place in the next year, is conclusive. On an overall view of the matter, we hold that the conclusion reached by the Appellate Commissioner and the Tribunal is essentially a finding of fact backed up by some basis. It is not, therefore, possible to upset that finding. The induction of a new pa....