Law: Income Tax Act, 1922

Section: 10,10,12,26A

Indian Income Tax Act, 1922(XI of 1922) ---Sections 10, 12, 26A-Firm- Registration-Lease of factory- Whether business-Held yes- Partnership carrying an business of leasing factory-Whether entitled to registration -Held yes-Provisions of section 10 and 12-Whether have anything to do with the validity of partnership-Held no. Section 10 and 12 of the Income Tax Act have nothing to do with the validity of a partnership either for purposes of the Partnership Act or for its registration under the Income Tax Act. Business may be done in a. number of ways. The owner of a factory may run it himself or lease it out. In either case he carries on the business of earning profits from a commercial asset. There can be a partnership carrying on the business of leasing property or commercial assets. Such, a partnership would be entitled to registration under section 26-A: Cases referred to:- Dal Chand. &, Sons v. =Commissioner of Income Tax (1968) 69 ITR 247 (Pb.); Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax (1954) 26 ITR 765; New Savan Sugar & Gur Refining Co. Ltd. v.Commissioner of Income Tax (1969) 74 ITR 7 (SC) and Tripurasundari Cotton Press Co. Ltd. V. Commissioner of Income Tax (1966) 62 ITR 19-3(AP). JUDGMENT D. K. MAHAJAN, J.-The Income Tax Appellate Tribunal, Delhi Bench "A", has referred the following question of law for our opinion: "Whether the Tribunal misdirected themselves in law in coming to the Ending that no business was carried on and, therefore, there was no partnership in law entitled to registration under section 26A of the Income Tax Act?" The assessee entered into a deed of partnership on the 20th day of April, 1957; in all there were 10 partners. These ten partners emanated from two families known as Nauharchand Chananram and Bishanmal Reluram. The dispute relate to the assessment year 1960-61 and arose on the application of the assessee for the renewal of the registration of the firm under section 26A of the Income Tax Act, hereinafter referred to as the Act. In the deed of partnership, in clause (3), it is clearly stated: "That the business of the firm is and shall be that of running the cotton ginning "and pressing…

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