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Validity of the registration of a firm under the Income-tax Act, 1961 based on the genuineness of the firm and unity of control and management between two separate firms. Analysis: The judgment pertains to a case where the Income-tax Officer rejected the application for registration of an assessee-firm, Oswal Trading Company, for the assessment year 1976-77, under section 185(1)(b) of the Income-tax Act, 1961. The rejection was based on the finding that the assessee-firm was not genuine and its business was actually carried on by another firm, Ghasiram Kalooram. The Income-tax Officer observed that there was unity of control and management, inter-relation of business, and common capital and staff between the two firms. The registration was declined, and the assessment was made in the status of an association of persons for subsequent assessment years as well. Both the assessee and Ghasiram Kalooram appealed the decision, but the appeals were dismissed by the Appellate Assistant Commissioner of Income-tax and the Tribunal. The assessee then filed applications for reference of the question of law arising from the Tribunal's order, leading to the current judgment. The court considered the arguments presented by both parties. The assessee contended that the two firms had independent businesses with different partners and no unity of control and management. However, the court referred to the test laid down by the Supreme Court in Setabganj Sugar Mills Ltd. v. CIT [1961] 41 ITR 272, emphasizing factors such as unity of control and management, inter-relation of businesses, common capital, and staff as crucial for determining the true identity of a firm. Ultimately, the court upheld the findings of the Income-tax Officer, Appellate Assistant Commissioner, and the Tribunal, concluding that there was sufficient material to support the rejection of registration for the assessee-firm. The court found that the unity of business and management between the two firms was established, and the finding was not deemed perverse. Therefore, the question was answered in favor of the Revenue, against the assessee. The judgment also granted the assessee liberty to file an application before the Tribunal for rectification or relief if permitted by law, and directed the transmission of the order to the Tribunal.
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