9911796707
|
Home
Issues Involved:
1. Whether a partnership in which one partner is the benamidar of another partner could be registered under section 26A of the Indian Income-tax Act, 1922. 2. Whether the instrument of partnership correctly specifies the individual shares of the partners. 3. The implications of an agreement amongst some partners regarding the beneficial ownership of shares. Detailed Analysis: Issue 1: Registration of Partnership with a Benamidar Partner The principal contention was whether a partnership, where one partner is a benamidar for another, could be registered under section 26A of the Indian Income-tax Act, 1922. The Income-tax Officer refused registration, asserting that Abdulrehman Kalubhai was merely a benamidar for Abdul Rahim Valibhai, thus the partnership deed did not disclose the true beneficial interest. The Appellate Assistant Commissioner and the Appellate Tribunal upheld the registration, emphasizing that the structure of the firm remained valid for the purposes of section 26A, and the arrangement between the partners did not affect the firm's structure. Issue 2: Correct Specification of Individual Shares in the Partnership Deed Section 26A requires that the instrument of partnership must specify the individual shares of the partners. The argument was that the partnership deed did not correctly reflect the true shares of the partners if one partner was a benamidar. The court analyzed the statutory requirements and rules, concluding that the instrument of partnership must correctly set out the names of the partners and their shares as per the agreement among all partners. If the deed accurately reflects the agreement among the partners, it should be registered. Issue 3: Agreement Amongst Some Partners on Beneficial Ownership The court considered whether an agreement between some partners regarding the beneficial ownership of shares affects the registration. It was noted that if such an arrangement is not binding on the partnership and is not agreed upon by all partners, it should not impact the registration. The court emphasized that the instrument of partnership should reflect the true position of affairs qua the firm. If an arrangement is only between some partners and not disclosed in the partnership deed, it does not invalidate the registration. Conclusion: The court reframed the question to address the specific circumstances of the case: "Whether on the facts and in the circumstances of the case, the partnership constituted under the instrument of partnership dated March 6, 1956, could be registered under section 26A of the Indian Income-tax Act?" The answer was affirmative, indicating that the partnership could be registered. The Commissioner was ordered to pay the assessee the sum of Rs. 500 as costs of the reference.
|
