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TMI Blog1983 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... eration before him, the only activity of the partnership was investment in the building of the factory, godown, etc., but no machinery was actually acquired and hence no milling or any other business was done. When the matter went up in appeal, the AAC held that upto 31st March 1977, that is the end of the previous year under consideration here, the assessee had made investment of more than Rs. 40,000 on construction of the building and had also made advances for purchase of raw material and machinery. He therefore, submitted that in such a situation, there was no justification for refusing registration on the only ground that no business was carried on during the previous year, The AAC, therefore, directed the ITO to register the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any business should be carried on, the ITO would be justified in holding that no partnership, as defined u/s. 4 of the Partnership Act, 1932, had come into existence but whether a partnership firm carried on any business in the relevant previous year was not relevant in determining whether there was in existence during the previous year a genuine firm and, therefore, the claim of registration could not be denied on the mere ground that no business was carried on by the firm during the previous year. Proceeding further, Shri Rastogi submitted that this was the latest enunciation of law on the subject and should, therefore, be followed in preference to the earlier ruling of the Hon'ble High Court of Mysore cited by the learned departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity in the nature of business in the assessee's case even during the previous years. The ruling of the Hon'ble High Court of Mysore in the case of Sudarshan Co. vs. CIT is therefore, on different facts and will not be applicable to the facts of the present case. It might perhaps not be out of place to mention here that there is a distinction between an activity in the nature of business and the income arising from that activity. While it is true that there can be no income from the activity of acquisition of land, investment in construction of factory building etc. And making of advances for purchase of raw materials and machinery, it cannot be said that these activities were not in the nature of a business of rice milling contempla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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