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Issues:
1. Cancellation of registration to the assessee-firm by the Assessing Officer. Detailed Analysis: The issue involved in this case pertains to the cancellation of registration of an assessee-firm by the Assessing Officer. The firm was originally constituted as a partnership firm, and the cancellation was primarily based on two main points. Firstly, it was raised that the partnership deed was signed by the same person in dual capacity, which was contested by the CIT(A) based on various High Court decisions. Secondly, objections were raised regarding the inclusion of a partner, Shri Laxmana Rao, who was deemed as a dormant partner with specific clauses in the partnership deed regarding his role and remuneration. The decision of the CIT(A) was supported by the Karnataka High Court's ruling in a similar case, which upheld the validity of the partnership. The Department contended that the provisions in the partnership deed, especially related to Shri Laxmana Rao's entitlement to fixed remuneration and exclusion from losses, rendered the partnership invalid. However, the appellate authorities considered the issue in-depth, citing relevant case laws, and allowed the appeal of the assessee based on the decision of the Karnataka High Court in another case. The Department raised objections based on judgments from different High Courts, arguing that the partnership was not valid due to certain clauses in the partnership deed. The CIT(A) distinguished the present case from those cited by the Department, emphasizing that capital contribution was made by the partner in question, unlike the cases referred to. The restrictive covenants in the partnership deed were analyzed to determine the intention of the partners and the validity of the partnership, with reference to relevant legal precedents. The Tribunal deliberated on the contentions raised by both parties and relied on the binding decision of the Karnataka High Court in a similar case to uphold the registration of the assessee-firm. It was established that the individual shares of profits and losses of the partners in the firm could be determined from the partnership deed, aligning with the criteria set by the High Court. Consequently, the judgment of the CIT(A) in granting registration to the firm was upheld, and all departmental appeals were dismissed.
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