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Issues:
1. Whether the firm was in existence during the relevant assessment year for tax purposes? 2. Whether the assessee was entitled to retain registration as a firm under the Income-tax Act, 1961, after transferring the business? Analysis: The case involved the transfer of business by the assessee to another party under an agreement, where the assessee agreed to render services to retain agencies and customers in exchange for a commission based on turnover. The Income-tax Officer taxed the commission received by the assessee as business income. However, the Commissioner of Income-tax revised the assessment, stating that since the business was transferred, the firm was not entitled to retain registration. The Tribunal, on appeal by the assessee, held that the assessee did not cease to do business despite the transfer and was entitled to retain registration. The primary issue was whether the assessee continued as a firm post-business transfer to retain registration. The Revenue argued that the existence of business is essential for a partnership, citing legal precedents. The Tribunal accepted the findings of the Income-tax Officer, who concluded that the commission received by the assessee was business income. The Commissioner's decision to set aside the assessment was deemed unsupported and perverse, as it contradicted the factual findings of the Income-tax Officer. The Tribunal's decision to uphold the assessee's entitlement to retain registration was considered well-founded. The court ruled in favor of the assessee, stating that the Tribunal correctly accepted the facts found by the Income-tax Officer and rejected the Commissioner's unsupported finding. The judgment directed the parties to bear their respective costs and ordered the forwarding of the judgment to the Income-tax Appellate Tribunal, Cochin Bench for further action.
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