Explanation to section 185(1) of the Income-tax Act, 1961-Filling of form No.12A in the case of Karta of HUF being a partner in a firm-Clarification regarding - Income Tax - 207/1976

Explanation to section 185(1) of the Income-tax Act, 1961-Filling of form No.12A in the case of Karta of HUF being a partner in a firm-Clarification regarding Circular No. 207 Dated 24/9/1976 To All Commissioners of Income-tax. Sir, Subject: Explanation to section 185(1) of the Income-tax Act, 1961-Filling of form No.12A in the case of Karta of HUF being a partner in a firm-Clarification regarding.- Reference is invited to the Explanation to section 185(1) of the Income-tax Act, 1961, as substituted by the Taxation Laws (Amendment) Act, 1975. This Explanation has been made effective from 1st April, 1976. The Explanation reads as under: "For the purposes of this section and section 186, a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar- (a) of any other partner to whom the first-mentioned partner does not stand in the relationship of a spouse or minor child, or (b) of any person, not being a partner of the firm, and any of the other partners knew or had reason to believe that the first-mentioned partner was such benamidar and such knowledge or belief had not been communicated by such other partner to the Income-tax Officer in the prescribed manner." 2. The Board have examined the question whether the provisions of clause (b) of the Explanation referred to above will apply to a case where a karta of an HUF is a partner in a partnership firm on behalf of his HUF. The Board are of the view that a Karta of the HUF cannot be regarded as a benamidar of the HUF. In view of this, there is no obligation to file Form No.12A in such cases. Yours faithfully, (Sd.) T.P. Jhunjhunwala, Secretary, Central Board of Direct Taxes.