COMMISSIONER OF INCOME TAX Vs. SHAH BROTHERS

JUDGEMENT

(1.) ALL these ITRCS are disposed of by this common judgment. The dispute is in respect of the assessment years 1980-81 to 1990-91. A common statement of case has been forwarded by the Income-tax Appellate Tribunal referring the following question of law, arising out of its order :

(2.) THE facts as stated by the Tribunal are that a piece of land admeasuring 11,578.80 sq. ft. situated in the cantonment area of Belgaum City was originally taken on lease for a period of about 90 years by Sutaria Automobiles Pvt. Ltd., after making an agreement with the Governor-General of India on February 24, 1948. This property was sub-leased in favour of the assessee, Shah Brothers, as per lease deed dated July 30, 1979. THE assessee is a firm whose main business activity was that of leasing out of land, putting up a structure thereon and to let them on hire. It has been collecting the annual rent from the properties and apportioning it to the signatories of the partnership as per agreement entered into by it. THE assessee claimed registration under Section 185 of the Income-tax Act, 1961, which was rejected by the assessing authority on the ground that no business activity was there. Aggrieved by this, the assessee-firm appealed before the first appellate authority who allowed the appeal thereby cancelling the order under Section 186 in which the Assessing Officer had cancelled registration.

(3.) THE Tribunal observed that for the purpose of granting registration under the Income-tax Act, the validity of the partnership has to be decided independent of the source of the income of the firm. Taking into consideration the object with which the firm was constituted, that is the nature of the business, directions were given to grant the registration.