COMMISSIONER OF INCOME TAX Vs. UPPALA RAMESWAR RAO AND CO

JUDGEMENT

(1.) In this reference at the instance of the Revenue, the question for our answer is :

(2.) A single statement of case has been drawn up in respect of three assessees, though for a common assessment year 1971-72.

(3.) The facts in R.A. No. 661 of 1976-77 are similar to those in R. A. Nos. 662 and 663 of 1976-77 : Uppala Rameswar Rao and Company, Nizamabad, is a sub-partnership constituted by a partnership deed dated 28/12/1969. Sri Uppala Rameswar Rao has one-third share in the firm of K. Narasa Reddy and others, Warangal, a group of Sindhi contractors with effect from 1/10/1969. Since the said Rameswar Rao found it difficult to contribute the required capital towards his share, he entered into an agreement with eight others who agreed to provide him with necessary funds on their being taken as partners in respect of the shares in the said named firm. Consequently, the assessees sub-partnership came into existence by a partnership deed dated 28/12/1969, and thereafter it applied to the Income-tax Officer treating the said sub-partnership as an association of persons mainly on the ground that the sub-partnership contravened the provisions of section 14 of the Abkari Act. On appeal, however, the assess succeeded against which the Revenue took the matter to the Tribunal which confirmed the order of the Income-tax Officer following the judgment of this court in R.C. No. 25 of 1973 which is reported in Addl. CIT v. Degaon Gangareddy G. Ramkishan and Co. [1978] 111 ITR 93. The Tribunal, in fact, held that