CITY TOBACCO MART Vs. COMMISSIONER OF INCOME TAX
LAWS(KAR)-1966-12-6
HIGH COURT OF KARNATAKA
Decided on December 15,1966

CITY TOBACCO MART Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, MYSORE Respondents





Cited Judgements :-

MADHUSUDANA AND CO VS. COMMISSIONER OF INCOME TAX [LAWS(APH)-1971-2-20] [REFERRED TO]


JUDGEMENT

Narayana Pai, J. - (1.)IN respect of the assessment for the two years 1952-53 and 1953-54, the claim was made by the concern called by City Tobacco Mart, that it was a partnership entitled to registration under section 26A of the INdian INcome-tax Act, 1922. According to the case, the partnership which was constituted by a written instrument was to consist of five partners, namely :
(1) H. Mohamed Khan,

(2) Mohurunnisa Begum,

(3) N. Mohamed Khan,

(4) H. Gaffar Khan,

(5) Mirza Habibulla Baig.

(2.)OUT of these, number 2 is the wife of number one, and number 3, the son of number one. Number 4 and 5 were employees under number one. The capital was to be contributed only by the first two in the sum of Rs. 6,00,000 by the former and Rs. 55,500 by the latter.
The assessing authority, the Income-tax Officer, refused registration. In the personal assessment of H. Mohamed Khan, he also held that the sum of Rs. 55,500 shown as capital contribution by the wife was in fact not her money, but a contribution by the husband himself.

Upon Appeal, the Appellate Assistant Commissioner accepted the finding that the capital contribution shown as having been made by the wife was, in truth, contribution by the husband himself. But upon further investigation into the attendant circumstances and relevant facts and after recording sworn statements of the parties concerned, he felt satisfied that the other members of the partnership had in fact been admitted as partners, although till the date of the constitution of the firm some of them had been working only as employees of the first partner. He, therefore, thought that it was a case in which registration under section 26A could be granted in respect of the partnership composed of partners Nos. 1 and 3 to, 5 omitting No. 2.

(3.)BOTH the assessee and the department were dissatisfied with this order and both of them went on appeal to the Appellate Tribunal, before which the department succeeded. The Tribunal came to the conclusion that there was no genuine partnership at all deserving of registration or capable of being registered under section 26A of the Act.
The Tribunal having refused to refer any question of law to the High Court on an application made to it by the assessee under sub-section (1) of section 66, the assessee mode this court for a direction to the Tribunal under sub-section (2) off the said section. This court, accepting the contention of the assessee that a question of law did arise out of the order of the Appellate Tribunal, directed the Tribunal to refer to this court, together with a statement of the case, the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right on the material before it in holding that the firm constituted under the partnership deed dated March 12, 1951, is not a genuine firm ?"



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