COMMISSIONER OF INCOME TAX Vs. SUNITA MUNDRA

JUDGEMENT

(1.) lit this reference under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred to this court the following questions of law :

(2.) Whether the Tribunal is right, on the facts and in the circumstances of the case, in interpreting that, though the firm's appeal was dismissed earlier as incompetent, yet the Appellate Assistant Commissioner was justified in entertaining the appeal filed by one of the partners of the firm, Messrs. A.K. Mundra and Co. ?"

(3.) Being aggrieved by that order, the firm filed an appeal under Section 246(c) of the Income-tax Act before the Appellate Assistant Commissioner who, vide his order dated September 5, 1979, in Appeal No. 77/(JL) of 1979-80, held that since there was a definite contract amongst the partners as regards the distribution of the profits of the firm, Section 13 of the Partnership Act did not come into play at all. Therefore, no part of the income which was not distributed in the year of account could be added in the assessment of any partner even for rate purposes, because no income belonged to any partner as such. Thereafter, the Department came in second appeal before the Tribunal and took up an additional ground that the Appellate Assistant Commissioner could not have entertained the appeal under Section 246(c) in the separate set of status because there was no such provision in that section. This ground was allowed and the appeal was accepted.