ADDITIONAL COMMISSIONER OF INCOME TAX Vs. DEGAON GANGAREDDY G RAMKISHAN AND CO

JUDGEMENT

(1.) AT the instance of the Additional Commissioner of Income-tax, Andhra Pradesh, the Income-tax Appellate Tribunal, Hyderabad Bench, in exercise of its powers under Section 256(1) of the Income-tax Act has drawn up a consolidated statement of the case and submitted the same to this court for its opinion on the following question of law:

(2.) IN order to appreciate the scope of the question, it is necessary to state the facts and circumstances, admitted or found by the Tribunal that gave rise to the question. The consolidated statement of the case is in respect of seven sub-partnerships, whose main partner is a partner in the main partnership firm known as "Nizamabad Group Sendhi Contractors". As the Tribunal adopted the facts in I.T.A". No. 1031 of 1969-70 as typical of the facts in all the seven appeals and disposed of the appeals by a common order, we prefer to refer to the facts of that appeal in detail.

(3.) ON appeal, the Appellate Assistant Commissioner agreeing with the assessing authority beld that the business of the sub-partnership was the same as that of the main partnership and the sub-partnership, if allowed, would defeat the purpose of the Abkari Act and dismissed the appeal. The applications for registration under the Income-tax Act by six other sub-partnerships similarly formed by the partners of the main partnership with others were rejected by the assessing authority and the appeals preferred by them to the Appellate Assistant Commissioner were also dismissed. All these seven sub-partnerships preferred appeals to the Appellate Tribunal. As the points at issue in all the appeals are similar, the Tribunal disposed of all the appeals by a common order. ON a consideration of the various clauses of the sub-partnership deed dated August 27, 1963, the Tribunal held that it could not be said that the sub-partnerships did not carry on any business, that sub-partnerships are separate entities valid in law and that it could not agree with the department's view that no sub-partnership was existing. Rejecting the plea of the department that the business of the sub-partnership was the same as that of the main partnership, the Tribunal allowed the appeals and directed that the sub-partnerships are entitled to registration under the Income-tax Act. Hence this referense.'