1983 (1) TMI 98

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....ion of the firm on 29th June, 1976. In the first place the minors went out. In the second place, two other persons, namely, Shri Satya Narain Tulsian and Vikram Kothari joined the firm representing two trusts, namely, Nidhi Kedia Trust and Sanjeeva Kedia Trust. A partnership deed recording these changes was also executed on 29th September, 1976 itself. 3. This new firm which is the assessee before us applied to the ITO for grant of registration. It also filed Form No. 12A showing that Satya Narain Tulsian and Vikram Kothari were the benamidars of their respective two trusts. 4. The ITO, however, rejected the claim and treated the assessee as an AOP of Shri Vijay Kumar Kedia and Shri Mannilal Kedia only. He found that on similar ground....

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.... s. 185(1) of the Act which has come on the statute w.e.f. 1st April, 1976 applied to the case of the assessee. Admittedly, cl. (A) does not apply to the case. According to cl. (b) of the Explanation a firm could not be regarded as a genuine firm if any partner thereof, at any time during the year, was a benamidar of any other person, not being a partner of the firm, and any of the other partners knew or had reason to believe that the first mentioned partner was such benamidar and such knowledge or belief had not been communicated by such other partner to the ITO in the prescribed manner. There is no dispute that such an information was communicated to the ITO in Form No. 12A. We, therefore, agree with the finding of the CIT(A) that the Exp....

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.... Kedia Trust were not genuine entities. The above decision of the Supreme Court clearly states that it is the partner himself who is recognised in the partnership and it is immaterial that he is either a trustee or a benamidar for another. The Calcutta High Court in the case of Askaran Kissenlal vs. CIT (1969) 73 ITR 522 (Cal) had held that the description in the partnership deed of one of the partners as the Karta of an HUF when no such HUF existed, would be a misdescription which would not invalidate the deed, but he would become a partner in his individual capacity. If it is taken that the two trusts were not genuine, then Satya Narain Tulsian and Vikram Kothari would become partners in the assessee firm in their individual capacities. W....