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Issues Involved: Determination of whether the assessee was deriving income from business and entitled to registration as a partnership firm.
Summary: The Income-tax Appellate Tribunal referred a question regarding the assessee's status as a partnership firm for registration under the Income-tax Act, 1961. The assessee, a partnership firm, filed returns for the assessment year 1978-79, showing income from house property and interest income. The Assessing Officer disallowed the claim of partnership status, considering the assessee as an association of persons. The Appellate Assistant Commissioner upheld this decision. The Tribunal, however, found the activities of the assessee, including construction, letting out property, and profit distribution, to constitute a business, thus justifying partnership firm status. The Tribunal directed the assessee to be treated as a firm but did not decide on registration. The main contention before the High Court was whether the Tribunal's conclusion that the assessee derived income from business was sustainable. The definition of "business" was extensively discussed, emphasizing activities carried out for profit. Legal precedents were cited to support the view that organized profit-seeking activities constitute business. The High Court found the Tribunal's conclusion to be a factual determination, not a legal question, and ruled in favor of the assessee, affirming the business nature of the activities. In conclusion, the High Court disposed of the reference, affirming the Tribunal's decision regarding the assessee's business activities and partnership firm status. No costs were awarded in the matter. Separate Judgment: No separate judgment was delivered by the judges.
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