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TMI Blog2002 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of Rs. 15,936 from the total income of the assessee?" - we answer questions Nos. 1 and 3 in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 2 is misconceived, as the Tribunal itself held that the assets in question are capital assets. - - - - - Dated:- 3-9-2002 - Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT The judgment of the court was delivered by Y.R. MEENA J.- On an application filed under section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Hazari Mal Milap Chand Surana and Mannalal Nirmalkumar Surana and Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the same profit and loss sharing ratio. In the firm, Mannalal Nirmalkumar Surana and Co., Mannalal Surana has contributed capital to the tune of Rs. 10,000, Nirmalkumar Surana has contributed capital to the tune of Rs. 15,31,000, Vimalkumar Surana has contributed capital to the tune of Rs. 15,32,000 and Narendrakumar Surana has contributed capital to the tune of Rs. 15,37,000. Nirmalkumar, Vimalkumar and Narendrakumar Surana have contributed capital in the form of goods. The Income-tax Officer has treated this firm, Mannalal Nirmalkumar Surana and Co., as just an extension of the assessee-firm. According to him, the business of the assessee-firm and Mannalal Nirmalkumar Surana and Co. is same, the partners are the same, profit and lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto existence in 1976 and was closed on January 20, 1982, just after the capital contributed was sold in the name of business of the firm of Mannalal Nirmalkumar Surana and Co. Mr. Ranka, learned counsel for the assessee-respondent, submits that the finding of the Income-tax Officer and the Commissioner of Income-tax (Appeals) is not correct to the extent that the business is the same. He further clarified that the business was in the same building but in different portions of the building. He further submits that the registration to the firm, Mannalal Nirmalkumar Surana and Co., has been granted by the Income-tax Officer and once the registration has been granted, it cannot be said that the firm, Mannalal Nirmalkumar Surana, is not genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a genuine firm. Was granted registration under section 185 of the Act on August 3, 1977. Assessment of the said firm was also made; 4. Registration has been granted to the assessee-firm and continuation is also being granted to the assessee-firm for the year in question and all succeeding assessment years; 5. There is no evidence of any interlacing, interlocking of funds; 6. The income earned by the new firm was distributed between its partners and was enjoyed by its partners; 7. Sales made to the assessee-firm/through the assessee-firm were at arm's length, at fair market value and as per trade practice/norms and there is no iota of evidence or allegation as to overstatement or understatement of price and diversion of income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be granted unless the partnership firm is genuine. Subsequently, the registration has been withdrawn, but in that year also the Tribunal has given the direction to grant registration to the firm, Mannalal Nirmalkumar Surana and Co. The issue was pending before this court for our consideration. We have decided the issue in favour of the assessee. Registration of the firm cannot be refused or the firm cannot be treated as just benami of the assessee-firm only on the ground that the partners of both the firms are common and the business is common. When the books are separate, the partners have contributed capital and the books of account are not rejected in the case of Mannalal Nirmalkumar Surana and Co., we fail to understand how the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 65 to 67)." Following the view taken by the Special Bench, the issue has been decided against the assessee, that the assets in question are capital assets. Question No. 3 relates to the issue whether the Tribunal was justified in deleting the addition of Rs. 15,936 from the total income of the assessee. The Income-tax Officer noticed that the assessee has declared Rs. 79,781 under the Voluntary Disclosure Scheme and the entry to that effect has been made in the books of account, after declaring that amount under the Voluntary Disclosure Scheme under section 8(1) of the Voluntary Disclosure Scheme, 1975. While making the entry in the books, the assessee credited in the books of account Rs. 85,385 on revaluation of those assets. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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