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TMI Blog1996 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal for coming to the conclusion that the assessee-firm was not a genuine firm and whether the finding of the Tribunal in that behalf was perverse?" A firm in the name of Ghasiram Kalooram was constituted by a deed of partnership, dated October 26, 1973, with partners, Smt. Chandbai, widow of Takhtamal, Shri Manaklal son of Takhtamal, Shri Rajendra Kumar son of Takhtamal and Shri Subhashchandra son of Takhtamal. Another firm was constituted by a deed of partnership, dated January 31, 1975, in the name of Oswal Trading Company with Shri Subhashchandra son of Takhtamal, Smt. Premkumari wife of Manaklal, and Smt. Kusumkumari wife of Rajendra Kumar, as partners. The firm, Ghasiram Kalooram was granted registration. The said firm was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the fact that the customers were mostly common and it was apparent from the accounts, that total transactions to the tune of Rs. 9,73,973 were routed through, diverted or financed by the other firm. According to the Income-tax Officer, the business of the two firms was being managed by the two male partners and the partners of Ghasiram Kalooram who were husbands of the female partners of the assessee-firm were shown as employees of the assessee-firm and salary was paid to them by the assessee. The female partners of the assessee had no management and control over the business of the assessee. On these facts, the Income-tax Officer reached a conclusion that there was unity of control and management, conduct of business by the same agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently constituted firm was merely an alter ego of the earlier firm. Learned counsel for the Revenue supported the order of the Tribunal and contended that on the facts found by the authorities, the conclusions were irresistible. The Supreme Court in Setabganj Sugar Mills Ltd. v. CIT [1961] 41 ITR 272, had laid down the test for determination if different ventures constitute the same business. Their Lordships have quoted with approval a passage from Scales v. George Thompson and Co. Ltd. [1927] 13 TC 83 : "... the real question is, was there any inter-connection, any interlacing, any interdependence, any unity at all embracing those two businesses." Their Lordships further observed : "that what one had to see was whether the different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct of business through the same agency, inter-relation and inter-dependence of business, employment of mostly the same capital and employment of the same staff to run the business between the two firms. Although there was nothing to suggest that the firm subsequently constituted could not have carried on this business if the earlier firm was dissolved and further there was nothing to indicate that common accounts were being maintained for both the firms, yet there was sufficient material for the findings reached by the Income-tax Officer for declining registration under section 185 of the Act and assessing the income of the firm on a protective basis in the status of association of persons. Whether or not a firm is genuine is essentiall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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