9911796707
TMI Blog1994 (8) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ts giving rise to this application are as under : The assessee, Rajesh Corporation, had applied for registration in Form No. 11. It was stated that there were three partners in the firm, which came into existence with effect from February 1, 1979. The accounting year of the firm ended on June 30, 1979. The Income-tax Officer, however, held that the partnership was not genuine and the two lady partners, Smt. Bhanwar Devi and Smt. Vimla Patni, are not genuine partners, but are benamidars of the male partner, Shri Sirehmal Chopra. He further held that the execution of the instrument of partnership was only a make-believe document. He, therefore, refused registration to the firm and the assessment has been made in the status of an unregistere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, no part of profit has gone to the ladies and it has all remained under the control of the male partner, Shri Sirehmal Chopra. It was also noted by the Income-tax Officer that the male partner had a share of 40 per cent. whereas the two ladies have been given a share of 35 per cent. and 25 per cent., respectively, which was quite out of proportion considering that they had not made investment. From the facts stated above, the Income-tax Officer inferred that the partnership was an attempt to divert the income and was a result of collusion between the persons concerned, thus holding the two ladies to be benamidars of the male partners. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer. The assessee feel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication. We have heard Mr. G. S. Bapna, learned counsel for the Commissioner of Income-tax, and Mr. J. K. Rana, learned counsel for the assessee. Learned counsel for the Revenue contended that the Tribunal was not justified in rejecting the application under section 256(1) and the question raised by the Department is a question of law which does arise out of the order passed by the Tribunal and as such the Tribunal may be directed to state the case and to refer the question mentioned in the application filed by the Revenue. In support of his contention, he placed reliance on the judgment of the Madhya Pradesh High Court in Doshi Vastralaya v. CIT [1989] 175 ITR 309. In the aforesaid case, the profit had not been distributed between the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separated. On March 1, 1943, a firm by name Ratanchand Darbarilal was constituted at Katni with Dhanyakumar and Jaykumar as its partners and these two represented their respective families. The firm carried on business in textile goods and in due course, acquired substantial properties out of contributions made by the two Hindu undivided families. In 1950, a separate retail shop by name Premier Cloth Stores was opened at Katni by the firm. Similarly, in 1953-54, a branch was opened at Satna for handling cloth business. On November 1, 1956, under a partnership deed, the Satna business was taken over by a firm consisting of three partners, namely, Dhanyakumar, Jaykumar and Abhaykumar, and the partnership was deemed to have begun from Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? " However, the Commissioner of Income-tax applied to the High Court for directing the Tribunal to refer three further questions which are not relevant for the purpose of the present case. The High Court entered into the facts of the case and set aside the judgment of the Tribunal holding that the firm was entitled to registration. In the appeal filed by the assessee before the apex court, the apex court reversed the order passed by the High Court and restored the order of the Tribunal. The dictum laid down by the apex court in Ratanchand Darbarilal's case [1985] 155 ITR 720 was that the question whether a firm is genuine or not is a pure question of fact and not a question of law. We have carefully perused the judgment of the apex court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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