COMMISSIONER OF INCOME TAX Vs. HYDERABAD STONE DEPOT
HIGH COURT OF ANDHRA PRADESH
COMMISSIONER OF INCOME TAX
HYDERABAD STONE DEPOT
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GOPALRAO EKBOTE, C.J. -
(1.) THIS case has come to us on reference made by a Bench of this Court on 28th July, 1971. The
Bench noticed the conflict between Addepally Nageswara Rao & Bros. vs. CIT (1971) 79 ITR 306
(AP) and R.C. No. 50 of 1966 dated February 19, 1970 (CIT vs. Mandyala Govindu & Co. (1971) 82
ITR 926 (AP)) and R.C. Nos. 65 and 82 of 1968 dated February 10, 1971 (Khummaji Milapchand &
Co. vs. CIT (1973) 91 ITR 333 (AP)). In order to resolve this conflict the matter has been referred.
(2.) BEFORE November 1, 1957, the Hyderabad Stone Depot consisted of 16 Partners. From November 1, 1957, however, under a deed of partnership executed on November 5,1957, a new
partnership consisting of 18 partners was constituted. One of the partners, viz., Subash Keswarkar,
being a minor, was admitted to the benefits of partnership.
(3.) FOR the asst. year 1959 -60, the firm filed an application under S. 26A of the IT Act before the ITO. Without making any order on the said application, the ITO made an assessment order treating the
firm as an unregistered one. The assessment order was made on October 29, 1959. Subsequently,
on an application made by the assessee under S. 27 of the Act, the ITO re -opened the assessment
and made a fresh assessment on March 31, 1960, treating the firm as a registered one. The firm
was thus assessed to a tax of Rs. 5,946.46. The ITO then allocated the profits among the 15
partners. The ITO disallowed the alleged loss of Rs. 26,369 and made certain adjustments.
The assessee carried the matter in appeal. The AAC set aside the assessment order and remitted the case to the ITO directing him to dispose of the application filed under S. 26A of the Act
before making any allocations under S. 23B of the Act. The AAC also felt that the relevant factors
necessary to make the assessment were not examined by the ITO.;
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