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1966 (1) TMI 20 - SC - Income Taxwhether there was a sub-partnership between the members of the Ferozepore firm in respect of the share of Gosain Chander Bhan is not material because assuming that there was no sub-partnership the members of the Ferozepore firm did not become partners in the assessee-firm by virtue of the relevant clause in the deed dated June 14 1952 or otherwise. We are therefore satisfied that no substantial question of law arises out of the order of the Appellate Tribunal. Counsel for the appellant submitted that as a question of law arose out of the order of the Tribunal the High Court was bound to call for a statement of case. We are not inclined to accept this contention. Where as in this case the question of law is not substantial and the answer to the question is self-evident the High Court is not bound to require the Tribunal to refer the question. In our opinion the High Court in the exercise of its discretion under section 66(2) rightly rejected the appellant s application. Appeal dismissed.
Issues Involved:
1. Whether the partnership deed of the assessee-firm specified the real partners. 2. Whether the Ferozepore firm was a partner in the assessee-firm. 3. Whether the assessee-firm was validly constituted. 4. Whether a sub-partnership existed. 5. Whether the assessee-firm could be registered under section 26A of the Indian Income-tax Act, 1922. 6. Whether a substantial question of law arose from the Tribunal's order. Issue-wise Detailed Analysis: 1. Whether the partnership deed of the assessee-firm specified the real partners: The Income-tax Officer initially rejected the application for registration under section 26A, citing that the partnership deed did not specify the date of constitution of the assessee-firm and questioned the genuineness of the partners. However, the Appellate Assistant Commissioner and the Tribunal later found that the partnership deed dated December 5, 1952, clearly stated that Gosain Chander Bhan and 13 other parties were the partners of the assessee-firm. The Tribunal concluded that the deed was valid and specified the real partners, thus supporting the registration application. 2. Whether the Ferozepore firm was a partner in the assessee-firm: The Income-tax Officer argued that the Ferozepore firm was a partner in the assessee-firm because Gosain Chander Bhan secured capital from the Ferozepore firm and shared profits and losses with its partners. However, the Appellate Assistant Commissioner and the Tribunal held that Gosain Chander Bhan was a partner in his individual capacity. The Tribunal supported this finding by referencing judicial decisions and concluded that the Ferozepore firm was not a partner in the assessee-firm. 3. Whether the assessee-firm was validly constituted: The Tribunal and the Appellate Assistant Commissioner determined that the assessee-firm was validly constituted. They found that Gosain Chander Bhan, in his individual capacity, could legally be a partner in the assessee-firm, and the fact that he secured capital from the Ferozepore firm did not affect the validity of the assessee-firm. The Tribunal upheld that the assessee-firm was genuine and met the requirements for registration under section 26A. 4. Whether a sub-partnership existed: The Tribunal and the Appellate Assistant Commissioner concluded that there was a sub-partnership between Gosain Chander Bhan and other partners of the Ferozepore firm concerning his share in the assessee-firm. They referenced the clause in the partnership deed of the Ferozepore firm, which regulated the relationship among its partners and created a sub-partnership. However, this sub-partnership did not make the Ferozepore firm a partner in the assessee-firm. 5. Whether the assessee-firm could be registered under section 26A of the Indian Income-tax Act, 1922: The Tribunal upheld the Appellate Assistant Commissioner's decision that the assessee-firm met the requirements for registration under section 26A. They found that the partnership deed was valid, specified the real partners, and the firm was genuine. The Tribunal concluded that the assessee-firm was entitled to registration under section 26A. 6. Whether a substantial question of law arose from the Tribunal's order: The Supreme Court held that no substantial question of law arose from the Tribunal's order. The Court found that the Tribunal's findings were based on material evidence and supported by judicial decisions. The Supreme Court dismissed the appeal, stating that the High Court rightly exercised its discretion under section 66(2) to reject the application for a reference. Separate Judgment by Mudholkar J.: Mudholkar J. delivered a separate judgment, emphasizing that the High Court made an error in assuming the partnership deed constituting the Ferozepore firm was dated June 14, 1954, instead of June 14, 1952. He contended that the Tribunal and the High Court did not adequately address whether the Ferozepore firm was a partner in the assessee-firm and whether the Rupar firm had legal existence given the number of partners exceeded 20. Mudholkar J. concluded that substantial questions of law arose and directed the Tribunal to refer the questions to the High Court. Order: In accordance with the majority opinion, Civil Appeal No. 605 of 1963 was dismissed with costs. Civil Appeals Nos. 810 and 811 were dismissed with no order as to costs. Appeal dismissed.
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