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TMI Blog1980 (10) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... a Devi 25 per cent -do- 4. Shri Brijendra Kumar 10 per cent -do- The above firm was granted registration under s. 185 for the first time for the asst. yr. 1975-76. While granting the registration to the firm for this year the ITO held that Smt. Munnidevi and Smt. Shushila Devi were the benami partners of their husbands who were not partners in the above firm. He, however, did not refuse registration to the firm as the mere finding that two partners were benamidars, would not make the firm as not genuine. While arriving at the conclusion that the two partners were benamidars of outsiders the ITO took the following facts and circumstances into account: (i) The capital of both the lady partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st April, 1976 Expln. below s. 185(1) was substituted. The Expln. as substituted reads as under: "Explanation: For the purposes of this section and s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is in appeal before the Tribunal. It has been urged on behalf of the assessee that Expln. below s. 185(1) has wrongly been invoked by the ITO. It is for the assessee firm to indicate that any of the partners were benamidars of an outsider. If it does not deem the same and denies the proposition by filing form No. 12, it is under no obligation to inform the ITO within the meaning of the Expln. Another contention made is that the capital contribution is not a condition precedent as per terms of deed entered into between the parties before becoming partners. As such, if no capital contribution of self is made, it is not a valid ground for holding that the lady partners were benamidars of their husbands. Benefit of registration could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r husbands. The ld. Deptl. Rep., on the other hand, relied on the orders of the authorities below. 6. We have carefully considered the rival contentions. It is a common ground between the parties that the capital introduced by the two ladies in the firm was gifted to them by their husbands. Again it is a common ground that after gift, the gifted amounts became the absolute properties of the ladies. In this view of the matter, we are of the opinion that by introducing capital by the two ladies out of the gifts given by their husbands, it cannot be inferred that the two ladies were the benamidars of their husbands. Gifts have been accepted by the Department in as much as no finding has been given that the gifts were the devices for introduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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