NAGALAND LIQUOR STORES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE ITA Tribunal, Gauhati, has referred the following question which is said to arise out of the order of the Appellate Tribunal, as follows :

(2.) THE statement of the facts appears on pages 24 and 25 of the printed book. THE facts out of which the present reference arises are briefly stated : THEre was a partnership entered into on June 22, 1966, between three persons, Abin Inderjit Singh, Deshulie Haralu and Smt. Lushul Haralu with 50 per cent., 25 per cent., 25 per cent. shares fespectively of the profits of the firm.

(3.) THE concerned ITO having registered the said firm for the assessment year 1970-71, the CIT, Assam, Nagaland, Meghalaya, Manipur and Tripura, considered, while exercising his power of revision under Section 263 of the Act, that the order of registration by the ITO was "erroneous in so far as it is prejudicial to the interest of revenue ". THE possibility of prejudice to revenue arises by reason of there being a lesser rate for a partnership within the meaning of the Indian Partnership Act, than for a mere association of persons (AOP), But this possibility will not justify an approach, seeking to find some loop-hole or other in the partnership, where none exists, merely in an endeavour to collect income-fax at higher rates than permissible. A genuine and legal partnership cannot be treated as AOP.