TaxTMI 
TaxTMI 
1991 (7) TMI 58
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....okshi Krishnakant Shantilal are sons of Chokshi Shantilal Keshavlal, karta of the assessee-Hindu undivided family. In other words, the assessee-Hindu undivided family consisted of the father and his three sons. The said partnership firm carried on business in the name and style of Chokshi Shantilal Keshavlal. Chokshi Shantilal Keshavlal, karta of the assessee-Hindu undivided family, has a 40% share and his sons, Vinodchandra, Rohit Kumar and Krishnakant have a 20% share each in the profit and loss of the partnership firm. The partnership firm applied for registration under section 185 of the Income-tax Act, 1961 ("the Act" for short). The Income-tax Officer assessing the partnership firm, however, held that the partnership firm was not genuine and that the business, which was alleged to be carried on by the partnership firm, belonged to the assessee-Hindu undivided family. The Income-tax officer, therefore, refused to grant registration to the partnership firm for the assessment year 1968-69 and in the income-tax assessment of the assessee-Hindu undivided family, he included the entire income from the business, which was alleged to be partnership business, in the hands of the asses....
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....f the partnership is liable to be included in the hands of the assessee-Hindu undivided family. The Tribunal, however, held that the partnership firm is genuine and granted it registration. In this view of the matter, in the income-tax assessment of the assessee-Hindu undivided family for the assessment year 1972-73, it held that only the 40% share of Chokshi Shantilal Keshavlal who was partner in the partnership firm as karta of the assessee-Hindu undivided family was liable to be included in the total income of the assessee-Hindu undivided family. In other words, according to the Tribunal, the 60% share in the income of the said business belonging to Vinodchandra, Rohitkumar and Krishnakant was not includible in the total income of the assessee-Hindu undivided family. The Revenue sought reference and, at its instance, the following two questions have been referred to us for our opinion under section 256(1) of the Act: " 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the income of the firm of Messrs. Shantilal Keshavlal was assessable in the hands of the assessee-Hindu undivided family to the ext....
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....eir labour and skill. It was pointed out that the partnership deed was silent as to in what manner the partners had to make contribution towards the capital of the partnership firm. The evidence on record reveals that Chokshi Shantilal Keshavlal, who was the karta of the assessee-Hindu undivided family and Vinodchandra, had made contribution towards the capital of the partnership firm. However, since Rohitkumar and Krishnakant had not made any contribution to the capital of the partnership firm, it was urged, the partnership is invalid. Now all the above contentions which are raised on behalf of the Revenue could be considered and the decisions which are cited would be relevant only if the question arising before us is whether or not the partnership firm is genuine. However, no such question arises for our consideration in this reference. So far as the present reference is concerned, we have to proceed on the basis that the partnership firm is genuine and that it is duly registered. It is not disputed that the registration of the partnership firm is continued till 1983-84, the year in which it was dissolved. Learned counsel for the Revenue sought to rely upon the decision of the....
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.... hands of the assessee-Hindu undivided family. The next decision on which reliance was placed by the Revenue was the decision of the Bombay High Court in Shapurji Pallonji v. CIT [1945] 13 ITR 113. In that case, the assessee who was carrying on business in partnership with his brother introduced his son as a partner in the firm in November 1937, and gave him from his share of ten annas and eight pies, a share of four annas. The firm, as constituted, was registered by the Income-tax Officer in 1938-39 under section 26A of the Income-tax Act, 1922, and assessments were made on the firm and partners accordingly. Subsequently, in the course of reassessment proceedings under section 34 in respect of the assessment year 1938-39, the Income-tax Officer found, while proceeding under section 23(5)(a), that the assessee's son was a mere name-lender and that the entire profits representing the share of ten annas and eight pies actually belonged to the assessee. The Tribunal agreed with the finding of the Income-tax Officer. In reference, the Bombay High Court held that the Income-tax Officer was not, by reason of the registration of the firm under section 26A, prevented or estopped from ta....