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TMI Blog1975 (2) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the name of M/s. Malwa Knitting Works till March 31, 1958. On April 1, 1958, there was a partial partition between the family members and on that very day, a partnership was formed, which with effect from that date carried on the former family business. The partners of the firm were Shri Jagdishrai, advocate, his younger brother, Shri Amritlal, and their mother, Smt. Satyawatibai. This partnership firm applied for registration for the assessment year 1959-60, which was refused by the Income-tax Officer, the Appellate Assistant Commissioner and also by the Income-tax Appellate Tribunal. On a request by the assessee, the present reference was made by the Appellate Tribunal to this court. This case had come up before us on an earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of the firm. That affidavit was not controverted on behalf of the department. It is true that the terms of the partnership deed provided a clause, which authorised Shri Jagdishrai, advocate, to act on behalf of the firm as also to actively participate in the business. But that clause, as is obvious, remained a dead letter throughout and, even according to the additional statement of the Appellate Tribunal, Shri Jagdishrai, advocate, did not actively participate in the business of the firm. We may note the actual finding recorded by the Appellate Tribunal as follows : " Therefore, it cannot be held on the evidence as it stands that the object of the firm is such as to defeat the provisions of the Bar Councils Act. As the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o actively participate in the business of the firm, the partnership itself would be rendered illegal. In this view of the matter, there can be no doubt that the petitioner-firm was entitled to registration for the assessment year 1959-60. As a result of the discussion aforesaid, we would answer the question as follows : " That, on the facts and in the circumstances of the case, the assessee-firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922, for the assessment year, 1959-60. " Let the case be returned to the Income-tax Appellate Tribunal to take further action in accordance with the opinion recorded by us above. Further, we direct that there shall be no order as to costs of the present proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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