- (1.) This appeal by special leave has been preferred against the judgment dated 22nd July, 1975 of the Bombay High Court in I.T. Ref. No. 95 of 1965 made under S. 66(1) of the Indian Income-tax Act, 1922. The assessment year under reference was 1961-62.
(2.) Chandrakant Manilal Shah was the Karta of a Hindu undivided family (HUF) and the family was carrying on business of cloth. Naresh Chandrakant, one of the sons of Chandrakant Manilal Shah, joined the business on a monthly salary of Rs. 100/- since about April, 1959. It was asserted that with effect from Ist November, 1959 the business had been converted into a partnership between Chandrakant Manilal Shah as Karta of HUF and Naresh Chandrakant. The deed of partnership executed in this behalf on 12th November, 1959 indicated that Naresh Chandrakant had been admitted as a working partner with effect from 1st November, 1959 having 35 per cent share in the profits and losses of the firm and the remaining 65 per cent share was held by Chandrakant Manilal as the Karta of the HUF. An application was made for registration of the firm which was dismissed by the Income-tax Officer on the ground that there was no valid partnership. The view taken by the Income-tax Officer was upheld in appeal by the Appellate Assitant Commissioner. On further appeal, the Income-tax Appellate Tribunal also came to the same conclusion that there was no valid partnership and the business consequently must be taken to continue in the hands of the joint family. However, at the instance of the assessee the following question was referred by the Tribunal to the High Court for its opinion:- Whether on the facts and in the circumstances of the case, there was a valid partnership under Annexure 'A' between Shri Chandrakant, as the Karta of the HUF and Shri Naresh, a member of the family
(3.) The High Court by the judgment under appeal answered the aforesaid question in the negative, in favour of the Revenue and against the assessee. In doing so, it relied on an earlier decision of that Court in Shah Prabhudas Gulabchand v. Commr. of Income-tax, Bombay (1970) 77 ITR 870: (1971 Tax LR 1400). It Is against this judgment that the assessee has come up in appeal to this Court.;