TaxTMI 
TaxTMI 
2001 (3) TMI 238
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.... 50 per cent Shri Vaseev Sahdev (HUF) 20 per cent Shri Ramesh Khanna 15 per cent Shri Ravi Sahdev 15 per cent In the partnership deed it was mentioned that Shri Ravi Sahdev had been admitted to the benefits of partnership w.e.f. 1-4-1983 and was only entitled to share of profit and not to the losses. The said Shri Ravi Sahdev S/o Shri Vasdev Sahdev had attained majority on 11-6-1983 and had elected to be a partner of the firm w.e.f. 1-4-1983. 3. On examination of the Partnership Deed the Assessing Officer found that for the period 1-4-1983 to 10-6-1983, the first 3 partners mentioned in clause 5 of the Partnership De....
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....na, who has since retired from the partnership, could not be produced before the Assessing Officer as he has shifted to Rajkot and Sh. Ravi Sahdev who appeared before the Assessing Officer replied to the questions asked by the Assessing Officer to the best of his recollection and it is not expected of a partner to remember trivial details as to the date when the partnership deed was executed and as to how much was the capital of the other partners. But this alone will not make Sh. Ravi Sahdev as a non-genuine partner. It was submitted that the answers given by Sh. Ravi Sahdev to the various questions put by the Assessing Officer should be viewed in their proper perspective because factually the statement of Sh. Ravi Sahdev that he did not withdraw any amount from his account was correct as no money was withdrawn for personal use by Sh. Ravi Sahdev and the withdrawals were only for making payment of the income-tax, CDS and for purchase of NSCS. As regards non-specification of the distribution of loss, for the period 1-4-1983 to 10-6-1983, it was submitted by Sh. Sud that this was not material as Sh. Ravi Sahdev had attained majority on 11-6-1983 and elected to be a partner of the fi....
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....m, the firm ought to have been treated as a Regd. Firm, it was submitted by Sh. Kanwal that the assessment of the partners were framed under-section 143(1) by taking the shares from the firm as declared subject to rectification and the Assessing Officer had not applied his mind to the question of registration while framing the assessment of the partners under section 143(1) and as such this cannot be a bar for examimg the question of genuineness of the firm and granting registration while framing the assessment of the firm itself. 7. We have considered the rival submissions. The Ld. CIT(A)has discussed in detail the legal aspect as well as the factual aspect of the case in the impugned order dated 24-11-1988 for the assessment year 1984-85. The decision of Hon'ble Andhra Pradesh High Court in the case of Modern Stores has been rightly distinguished by the CIT(A) because in that case it was specifically mentioned that in the event of loss the four adult partners agreed to share them equally whereas there was no such stipulation in the case under appeal as Lo bow the losses for the period 1-4-1983 to 10-6-1983 were to be distributed. Similarly the decision of Hon'ble Allahabad Hig....
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....ayment of income-tax and CDS. The other partner Sh. Ramesh Khanna was not produced although specifically asked for by the Assessing Officer. 10. Thus taking into view the totality of facts and circumstances of the case, we are of the opinion that the departmental authorities were justified in refusing registration to the assessee firm for the assessment year 1984-85 and were also equally justified in refusing to grant continuation of registration for the assessment year 1985-86. 11. In the result, we have no hesitation in upholding the order of Ld. CIT(A) for both the assessment years under consideration and the appeals filed by the assessee for both the assessment years are dismissed. Per S. Grover, Judicial Member.-I have closely perused the order proposed by my learned brother but find myself unable to agree with the conclusion reached by him. Several judgments of the jurisdictional High Court of Punjab and Haryana and other Courts cited at the very outset of the hearing by Shri. N.K. Sud, Advocate, as direct authorities delivered under the Income-tax Act, 1961, hereinafter referred as the Act, have either completely escaped the notice of my learned brother or have been....
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....a High Court on similar issue. The judgment is by a Full Bench of the Hon'ble Supreme Court. (iii) CIT v. Indian Timber Traders [1989] 178 ITR 545 (Ker.) (iv) Basantlal Jain v. CIT [1992] 196 ITR 19 (Gauhati) 15. In view of the judgments of the jurisdictional High Court in the case of Jagadhri Electric Supply & Industrial Co. and others cited above, which fully covers the present controversy, I see no justification to hold that there was any legal infirmity in the Partnership Deed or the profit and loss sharing ratio of the partners. 16. I may add that my brother has wrongly relied on the decision of the Supreme Court in the case of Mandyala Govindu & Co. The facts of the said case are clearly distinguishable as in the case before the Supreme Court the minor had not attained majority during the financial year under consideration. This important distinction has also escaped the notice of my learned brother. 17. I have gone through the statement of Shri Ravi Sahdev a copy of which has been placed at page 11-12 of the paper book. I find that in response to question Nos. 4 to 7 he had duly explained that he was a partner in M/s. P.M.S. Enterprises for 3 years having 15 per ....
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.... counsel drew our attention to the case of CIT v. K. Chandrasekaran wherein the Supreme Court relying on the said Circular dismissed the S.L.P. of the department against the decision of Madras High Court in the case of CIT v. Blue Mountain Engg. Corpn. [1978] 112 ITR 839, wherein the said principle was reiterated. Thus, it was argued, that this clearly established that even the Supreme Court was of the view that the circular of CBDT applied to such a situation. Thus registration could not be denied on this score as well. 21. Copies of the assessment order of two partners S/Shri S.K. Sahdev and Ravi Sahdev for the two relevant years have been placed at pages 15-16 and 19-20 of the paper book projecting that they have duly been assessed in respect of their respective shares. Thus as held by the Supreme Court, the Circular of the CBDT will govern the situation and registration could not be refused. The Patna High Court in a recent case in CITV. Imperial Textiles [1993] 201 ITR 555 has also taken the same view. 22. In view of the aforesaid factual and legal position, I feel no other option but to bold that the assessee-firm is entitled to the benefit of registration for the asses....
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....d that the deed was silent as to how the losses were to be shared between the partners for the period 1-4-1983 to 10-6-1983. He, therefore, held that the partnership deed was not genuinely constituted in view of the ratio of the decision of the Hon'ble Supreme Court in the case of Mandyala Govindu & Co. and accordingly refused registration. 3. Aggrieved by the said order, the assessee took up the matter in appeal before the CIT(A), who however upheld the order of the Assessing Officer. 4. Still aggrieved the assessee took up the matter in appeal before the Tribunal. The learned accountant Member considered the various submissions and came to the conclusion that the issue was covered in favour of the revenue by the decision of the Hon'ble Supreme Court in the case referred to by the Assessing Officer earlier, in the case of Mandyala Govindu & Co. Even otherwise it was his view that Shri Ravi Sahdev was not aware of his being a partner of the firm as also the affairs of the firm as as that time he was Studying for Diploma in Mechanical Engineering from Ramgarhia Polytechnic. Taking in view the totality of facts and circumstances of the case, he was of the view that the revenue ....
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.... the assessee-firm was entitled to the benefit of registration for the assessment year 1984-85 and that of continuation of registration for the assessment year 1985-86. 6. It is on this difference of opinion that the above question has been referred to me. At the hearing Shri. V.P. Vijh, learned authorised representative appeared for the assessee. He vehemently supported the order of the learned CIT(A). According to him the assessee-firm in this case executed the deed of partnership after Shri Ravi Sahdev attained majority. The period of his minority was from 1st April to 10th June, 1983. Shri Ravi Sahdev, however, agreed lo share both the 16ss and profit for the entire accounting period. Even in any case, the accounts of the assessee-firm were to be closed at the end of the financial year and there is no question of sharing the loss or profit for the period from 1-4-1983 to 10th June, 1983. It is, therefore, no more relevant to consider the minority period of Shri Ravi Sahdev as the deed which was subsequently signed contemplated closing of the accounts at the end of the financial year and such profits and losses were to be distributed on the basis of the share ratio agreed upo....