Law:

Section:

Section 184 of the Income-tax Act, 1961 - Firm - Position prior 1-04-1993 - Assessment year 1962-63 - Where merely because management of business had been entrusted to one of partners, it could be said that no partnership came in to existence so as to refuse registration to firm, when all ingrdients of partnership were satisfied - Held, no FACTS One 'S' transferred certain amount from his individual business in name of his son, 'P' and there-after a partnership was entered into between them. An application was filed for registration of the said firm. The ITO taking into account certain clauses of the partnership deed, held that there was no relationship of partners between the said 'S' and 'P' inasmuch as 'P' derived his right and power only by consent of his father and, therefore, rejected the application for registration. The AAC held that the two conditions for bringing into effect a partnership, namely, (1) an agreement to share the profits as well as the losses of the business, and (2) each of the partners acting as agent of the other, had been duly fulfilled in this case and that the mere fact of the power to manage the business having been exclusively given to the father would not invalidate the partnership. The AAC, accordingly, ordered the registration of the firm. The Tribunal held that as the entire control and management of the business had been left in the hands of the father and the bank accounts were to be operated only by the father, there could not in fact be a legal partnership and the son had to sign documents and other records on behalf of the firm only on the instructions of the father and this showed that the son had no right or power to represent the firm in his own right. The Tribunal, accordingly, decided against the assessee. On reference: HELD The Tribunal was not right in holding that the circumstances set out above were decisive factors in findings out the existence or otherwise of the relationship of partners as per the terms of the partnership. The fact that the management of the partnership business was entrusted to one partner, namely, 'S', and the bank accounts were to be operated exclusively by that partner, could not be…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492