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1. Refusal to refer a question of law to the High Court regarding the treatment of two separate partnership firms as one for tax assessment purposes. Analysis: The judgment pertains to applications filed under section 256(2) of the Income-tax Act, 1961, concerning the refusal by the Income-tax Appellate Tribunal, Hyderabad, to refer a question of law to the High Court. The question at hand was whether two partnership firms should be treated as one entity for tax assessment purposes. The Revenue argued that since both firms had the same partners and one firm advanced funds to the other, they should be assessed together. However, the Tribunal concluded that the firms were separate entities based on factual circumstances and the partnership law. The Tribunal's decision was challenged, citing a Supreme Court case and urging a reference to the High Court. The High Court analyzed the situation, emphasizing that the partnership law should first determine whether there are two separate firms before assessing them together for tax purposes. It noted that the assessing authority failed to examine if the firms were validly constituted under the Partnership Act. The Court highlighted that the mere fact of one firm advancing funds to another does not automatically make them one entity for tax assessment. The Tribunal's decision was deemed appropriate as it considered factual circumstances and partnership law in determining the firms' separateness, unlike the assessing authority. Ultimately, the High Court dismissed the applications, stating that no question of law arose from the facts presented. It declined to direct the Tribunal to refer the matter to the High Court, affirming the Tribunal's decision regarding the treatment of the two partnership firms as separate entities for tax assessment purposes.
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