9911796707
TMI Blog1978 (2) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... t February, 1966, a fresh deed was executed by the parties incorporating the terms and conditions, modified from the earlier deed. The relevant terms are as follows : (a)That the parties hereto would carry on the business in co-partnership under the name and style of Sangam in the Stall No. G-13, S. S. Hogg Market, Calcutta, for further term of 10 years commencing from the 1st day of February, 1966. (b) The entire capital of the business required from time to time for the purpose of carrying on the business would be advanced by the said Naraindas Lakhumal and the said Laxmi Devi would have no concern therewith. (c) The respective shares of the parties in the partnership business would be as follows : Laxmi Devi-Three-fourths part or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to Laxmi Devi and added the same back to the income. On appeal before the AAC, it was contended on behalf of the assessee that the deeds were not acted upon, and that in fact the said stall had been taken on lease by Naraindas Lakhumal from the said Laxmi Devi and the amounts paid to Laxmi Devi were on account of monthly rent. The AAC accepted the contentions of the assessee and found that no genuine partnership had come into existence and the deeds were in the nature of a lease. He held further that Laxmi Devi should be considered to be the owner of the shop and payments made to her by way of rent should be allowed as business expenditure of the assessee whose status would be as that of an individual. He deleted the additions of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and had been rightly added back. Accordingly, the Tribunal set aside the order of the AAC and restored the order of the ITO. Thereafter, the assessee initiated the present reference and under s. 256(1) of the I.T. Act, 1961, the following questions have been referred : " 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the Appellate Assistant Commissioner has acted beyond his jurisdiction in deciding the question of status in an appeal on quantum ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the amount paid to Smt. Laxmi Devi was the share of profit and was rightly added bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not raised before the Appellate Assistant Commissioner by the appellant. " He submitted that it was apparent from the deeds that a valid partnership did not come into existence thereby. Laxmi Devi had no right to the profits of the business except as to the fixed monthly amounts and she was not responsible for any loss. She had also no power to manage nor interfere with the business in any way. Mr. A. Sengupta, learned counsel for the revenue, contended on the other hand that irrespective of the question whether a partnership was duly constituted or not, the direction of the ITO in adding back the amounts credited to Laxmi Devi cannot be assailed. The assessee claimed deduction of the said amounts as business expenditure on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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