COMMISSIONER OF INCOME TAX Vs. KRISHNA MINING CO

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter called "the Act"), made by the Income-tax Appellate Tribunal, Hyderabad Bench, for the opinion of this court on the following question of law :

(2.) THE material facts as disclosed from the statement of case are as follows : THE assessee is a partnership firm constituted under the deed of partnership dated August 12, 1942, with two partners, viz., Sri G. Ven-katasubbaiah and Sri G. Venkateswara Rao, sharing profits and losses equally. THEy were the kartas of their respective HUFs, which owned the firm's business originally. THEre were genuine partitions of movable and immovable properties among the members of both the families by Septem- ber 30, 1958. Consequent upon the partition in each of the two families of the partners, there was a change in the constitution of the firm under a partnership deed drawn up on October 1, 1958. THE members of the divided families became partners including some minors who had been admitted to the benefits of the partnership. THE profit-sharing ratio in accordance with the new deed is as follows :

(3.) THE ITO preferred an appeal to the Income-tax Appellate Tribunal challenging the correctness of the decision of the AAC and praying to restore his order for the reasons indicated therein. THE Income-tax Appellate Tribunal agreed with the AAC and found thus: