COMMISSIONER OF INCOME TAX Vs. KASHMIR BOOT HOUSE

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question of law arising out of its order dated November 24, 1980, under Section 256(1) of the Income-tax Act, 1961, in respect of the assessment year 1977-78 :

(2.) THE brief facts of the case are that the assessee-firm consisted of four partners. One of the partners, Smt. Devi Bai, expired in July, 1975. In her place, her grandson, Shri Nirmal Kumar, was taken as a partner with effect from January 1, 1975 (sic). THE assessee filed an application in Form No. 11A claiming registration to the firm. THE Income-tax Officer observed that profits were divided between the old partners and no profit had been given to Shri Nirmal Kumar in accordance with the new partnership deed. He, therefore, held that no genuine firm existed and accordingly did not grant registration to the firm. An appeal was preferred and it was contended that the correct date of death of Smt. Devi Bai is June 26, 1975, and it was by mistake that the date was mentioned as July 1, 1975. THE Appellate Assistant Commissioner observed that after the death of Smt. Devi Bai, her account was closed but it was continued in the account books of the firm and the profit was credited in her account as if she was a partner in the firm. THE account of Shri Nirmal Kumar represented a loan to the firm and the profit was not credited to his account. In view of the above, the Appellate Assistant Commissioner held that Shri Nirmal Kumar was not a partner of the firm and the new partnership deed was not given effect to and accordingly the order of the Income-tax Officer was upheld.