BERY ENGINEERING CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred to us under section 66(1) of the Income-tax Act by the Income-tax Appellate Tribunal (Delhi Bench).

(2.) THE facts in this case are that the assessee firm, the Bery Engineering Company of Delhi, was originally a one-mans business belonging to Mr. T. C. Bery, who, however, alleges that on the 17th of August, 1948, he gifted a one-fourth she in the firm to each of two of his sons, and in this form the partnership carried on business from the 9th of August, 1948, to the 31st of March, 1949. He also alleged that as from the 1st of April, 1949, he reorganized the partnership by including a third son, his share from that date being ten annas and each of the three sons two annas. This arrangement remained oral until it was incorporated in a partnership deed drawn up on the 8th of September, 1949. THEse partnerships were relied on in connection with the firms assessments for the years 1949-50 and 1950-51 relating to account years ending on the 31st of March, 1949, and the 31st of March, 1950. His applications for the registration of both these firms based on the deed of gift dated the 17th of August, 1948, and the partnership agreement dated the 8th of September, 1949, were rejected by the Income-tax authorities and by the Tribunal. We are now no longer concerned with the earlier firm in which two sons were joined, but only with the second firm in which the father and three sons became partners. THE registration of this firm was rejected on the ground that admittedly the firm had come into existence by oral agreement as from the 1st of April, 1949, and therefore it could not be said to be constituted under the instrument dated the 8th of September, 1949. THE Tribunal has, however, framed the above legal question for our decision.