9911796707
TMI Blog1989 (8) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that Bhikhabhai Girdharlal & Co. had advanced a sum of Rs. 7,.08,942 to the assessee-firm, which was outstanding as at the end of the relevant previous year, on which the assessee-firm had paid interest amounting to Rs. 33,827 to the main firm. The learned Departmental Representative further contended that most of the partners of the assessee-firm and the main firm are common partners and common partners had contributed their capital in the assessee-firm out of withdrawals made by them from the main firm. The learned Departmental Representative also relied upon other reasons given in the assessment order in support of his contention that the assessee-firm is simply a branch of the main firm and hence it is not entitled for grant of registration and the income derived by the assessee-firm deserves to be clubbed in the income of the main firm. The learned Departmental representative further contended that the CIT(A) has erred in observing at page 6 that the Supreme Court judgments reported in A. Kuppiah Mudaliar vs. CIT(A) (1967) 63 ITR 531 (Mad) and Dy. Commr. of ST vs. K. Kelukutty (1985) 155 ITR 158 (SC) relied upon by the IAC in the assessment order does not support the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such non-inclusion of income derived by the assessee-firm in the hands of Bhikhabhai Girdharlal & Co. was a conscious and considered decision taken by the assessing authority in the case of Bhikhabhai Girdharlal & Co. He invited our attention towards letter dt. 5th Nov., 1985 and 18th Nov., 1985 submitted by Bhikhabhai Girdharlal & Co. to their assessing authority during the course of assessment proceedings for asst. yr. 1983-84 in which detailed facts and submissions were made in support of their contention that income derived by the assessee-firm H. Ajitbhai & Co. is not includible in the hands of Bhikhabhai Girdharlal & Co. The fact that IAC (Asst) in the case of the assessee has held that the income of the said firm is to be clubbed in the hands of Bhikhabhai Girdharlal & Co. as per assessment order dt. 30th Sept., 1985 was also brought to the notice of their assessing authority. After considering the detailed facts, material and evidence the assessing authority has not clubbed the income of the assessee-firm in their hands. According to the learned counsel this fact clinches the issue under consideration and the Revenue cannot now validly contend that the assessee-firm is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of loan taken from the firm Bhikhabhai Girdharlal & Co. proves the genuiness of the loan and this fact cannot be validly relied upon for holding the assessee-firm as a branch of the main firm. The learned counsel also contended that the capital contributed by all the partners of the assessee-firm has been treated as genuine, as is evident from the fact that no addition on account of any unexplained capital contribution by any of the partners has been made by the assessing authority. He also contended that there is apparently a different constitution and different profit sharing ratio in the assessee-firm as compared to the constitution and profit sharing ratio in the main firm. The assessee-firm has a separate bank account, separate registration under the Partnership Act and its separate constitution has been notified to the entire connected outside world. The profit have been really enjoyed by the partners of the assessee-firm and there is no evidence that the profits credited in the partners' account have directly or indirectly, flown in favour of the main firm at any time. He also submitted that the reliance placed by the learned Departmental representative on the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Co. A perusal of the assessment order further establishes that the assessing authority has not disbelieved genuineness of the capital contribution made by the partners of the firm. The mere fact that some of the partners have made their respective capital contribution by withdrawing their own funds from the firm Bhikhabhai Girdharlal & Co. does not in any manner support the Revenue's contention that the entire finances came from the main firm. The partners of the main firm are entitled to withdraw their capital from the said firm and utilise the same in any manner, as may be considered proper by those partners. The assessing authority has not recorded the statements of any of the partners and has not brought in any other material to prove that the partners of the assessee-firm are not genuine partners thereof. There is no evidence on record to prove that the income derived by the assessee-firm has directly or indirectly flown in favour of the main firm Bhikhabhai Girdharlal & Co. Similarly the assessing authority has not been recorded statement of any of the creditors to support the contention of the Department that the assessee-firm availed credit facilities from various mercha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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