COMMISSIONER OF INCOME TAX Vs. GURUNATH TALKIES

JUDGEMENT

(1.) THIS is an appeal by the Revenue under Section 260 A of the Income-Tax Act, 1961 (for short, 'the Act') directed against the order of the Income-Tax Appellate Tribunal, Bangalore in ITA 581/bang/2002 rendered on 1-10-2003.

(2.) THE appeal had been admitted for examination on the following questions of laws

(3.) THE brief facts leading to the above appeal are as under: assessee is a partnership firm and the relevant assessment year is 1995-96. The firm was carrying on the business of maintaining a cinema theatre, comprising of four partners who were entitled to share the profits of the firm. The previous year corresponding to the assessment year is from 1. 4. 1994 to 31. 3. 1995. A reconstitution of the partnership firm took place some where in July 1994 by addition of two partners to the partnership firm. It is indicated in the books of accounts that the incoming partners brought about 17 lakhs towards their capital contribution to the firm and on 15. 12. 1994 the firm was again reconstituted with the erstwhile four partners going out retiring from the partnership, the newly added partners remaining in the firm and continuing the firm. The firm had filed its returns of income for the year 1995-96 and it appears declared a loss of Rs. 2,60,104/ -.