COMMISSIONER OF INCOME TAX Vs. RATANCHAND DARBARILAL

JUDGEMENT

(1.) THIS order shall also govern the disposal of Misc. Civil Cases Nos. 587 and 588 of 1971 (Commissioner of Income-tax v. Ratanchand Darbarilal).

(2.) THIS is a reference under Section 66(1) and (2) of the Income-tax Act, 1922, at the instance of the revenue, and it pertains to the registration of the firm, M/s. Ratanchand Darbarilal of Satna, under Section 26A of the Act.

(3.) UP to and including the assessment year 1957-58, the shop at Satna was treated for income-tax purposes as branch of the Katni firm. During the assessment year 1958-59, the assessee claimed that there was bifurcation of the business of the partnership. The claim was that the business carried on by the firm at Satna had been separated from the business carried on by it at the head office at Katni, by constituting two separate and distinct partnerships under the name and style of M/s. S.S. Ratanchand Darbarilal, Satna, and M/s. Ratanchand Darbarilal, Katni. The firm at Satna was brought into existence with effect from 9th September, 1956, i.e., the commencement of the Bhado year on the basis of an instrument of partnership dated 1st November, 1956, It was constituted of three partners: (1) Dhanyakumar, son of Darbarilal, (2) Jaikumar, son of Ratanchand, and (3) Abbaykumar, son of Ratanchand. The 4th, Prasannakumar, minor son of Dhanyakumar, was admitted to the benefits of the partnership. They had equal shares of 25P each. The firm at Katni was reconstituted by an instrument of partnership dated 1st April, 1957. That firm consisted of four partners having equal shares of 25P each--(1) Dhanya- kumar, son of Darbarilal, (2) Abhaykumar, son of Ratanchand, (3) Jai-kumar, son of Ratanchand, and Keshavkumar, son of Dhanyakumar. Their relationship will appear from the following genealogical table: <FRM>JUDGEMENT_258_ITR100_1975Html1.htm</FRM>