TaxTMI 
TaxTMI 
1982 (6) TMI 103
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.... The assessee-firm had been in existence since past and upto asst. yr. 1974-75, the same was constituted only of two partners S/Sh Kalu Ram and Sat Parkash. During assessment year under consideration, the third gentlemen Shri Ramesh Kumar was taken as a partner and a new partnership deed was executed on the strength of which the assessee put in claim of registration by filing Form No. 11. 2. In course of assessment proceedings, the ITO examined Shri Ramesh Kumar and for certain defects pointed out by the ITO in his assessment order cancelled the registration. The AAC came to confirm his action vide his order dt. 7th Dec., 1978. 3. When the assessee contested this finding of the AAC before the Tribunal, the Tribunal vide its order dt. ....
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.... on CIT vs. Kanhayalal Ram Chand 1977 CTR (P&H) 103 : (1979) 119 ITR 377 (P&H) and submitted that in case all the circumstances are taken into consideration the assessee's appeal deserves to be dismissed. 5. After taking into consideration the rival submissions and carefully going through the papers on record, we are unable to confirm the action of the AAC. First of all we would like to reproduce the statement of Shri Ramesh Kumar's verbatum recorded by the ITO in respect of which the assessee's allegation has been that it was recorded by Inspector. Its perusal shows that the same might have been written by the Inspector but the same is signed by the ITO and duly signed by assessee's counsel Shri S.P. Goel. The assessee cannot have the g....
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....still lying at my credit with the firm. Q. What you have been doing after leaving the partnership? A.I started my own business of Attachi making at Hissar and the investment was made by my parents. The name of firm is M/s Jain Bag Making Co., Hissar. Q. From the record I find that you drew some amount from the firm during the accounting period 1974-75. Can you tell me the amount you drew? A. No I cannot tell the amount as I never drew any money from firm. Q. Can you tell me the date or month in which the partnership deed was signed by you? A. No, I do not remember. Q. Can you tell me the names of witnesses in wholes presence you signed the partnership deed? A. There were only two names of the partnership deed and the....
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.... Revenue that in case a partner does a work which can be done by an employee it becomes an ingenue partnership and the said partner is nothing but an employee. This observation seems to be based on too farfetched an imagination and according to this, employees are not capable of doing any work which partner can do but as per our view cases are not unknown where they do better than the bosses. In case on the equation of employee's work and that of the partner's issue of registration is to be considered, it will be most unfortunate day for the taxpayers. The perusal of Ramesh Kumar's statement also shows that he used to give samples of cotton to the constituents besides looking after the guests of the firm. He clearly stated that the made no ....
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....ness. According to the ITO, a mere common interest or share of profits itself could not constitute the partnership." 7. According to us, looking after the guests is not an unimportant work and even if it is an unimportant work so considered for sake of argument, it cannot be said that the partner is equal to an employee and that makes the firm ungenuine. From thoroughly going through the reasoning of the lower authorities and the statement, we find that even considering all the circumstances, the Punjab & Haryana High Court's decision in the case of CIT vs. Kanhayalal Ram Chand 1973 CTR (P&H) 103 : (1979) 119 ITR 377 (P&H) instead of Revenue supports the contention of the assessee. In that case, their lordships held, "that in considering....