- (1.) An application for registration of a firm in Form Nos. 11 and 11-A along with original partnership deed and copy thereof, were filed in the office of the Income-tax Officer on 31-3-1980. The deed showed three partners, one of them being Prem Lata wife of Om Prasad Purwar, each partner having 1/3rd share. The Income-tax Officer took the view that Prem Lata representing a Hindu Undivided Family could not be so as she could not claim to be the Manager of the Undivided Family when her husband was alive. He also expressed the opinion that there could not be a smaller Hindu Undivided Family within the larger Undivided Family when there was no partition as such. In that view, the Income-tax Officer refused grant of registration. That order was confirmed on appeal by the Appellate Assistant Commissioner.
(2.) On further appeal, the Tribunal opined that in the case of a member of the Hindu Undivided Family representing the Undivided Family, it was not necessary that such member should be a Karta and that member should not be treated as benamidar within the ambit of Section 185 of the Income-tax Act as it stood then. Hence, the Tribunal held that registration could be granted inasmuch as Prem Lata as an individual was shown to be a partner in the partnership deed and she was entitled to 1/3rd share. The Tribunal also observed that there was no material difference whether the Hindu Undivided Family was represented by any member of the Family or the Karta. In that view the appeal was allowed by the Tribunal.
(3.) The Revenue applied to the Tribunal to refer the following questions to the High Court. "1. Whether Hon'ble Tribunal was legally correct in allowing registration to the firm, particularly when Smt. Prem Lata is alleged to have joined the firm as partner in the capacity of Manager of an HUF which has not been recognised u/S. 171 - "2. Whether, the Hon'ble Tribunal was legally correct in allowing registration to the firm when Smt. Prem Lata is benamidar of bigger HUF - The Tribunal rejected the application. The Revenue filed an application under Section 256(2) of the Income-tax Act. The High Court held that no statable questions of law arose in the case and rejected the application of the Revenue. It is that order which is challenged in this appeal by the Commissioner of Income-tax.;