Law:

Section:

Section 184 of the Income-tax Act, 1961-Firm-Registration-Entitlement to-Assessee-firm, running transport business with the help of own lorries and hired lorries, had three partners-One partner contributed no capital and his share in profits from own lorries not defined in partnership deed-Otherwise there was an agreement to share profits and every partner had authority to represent all partners on behalf of firm-Whether it could be said that assessee firm had two distinct businesses, one of own lorries and other of hired lorries-Held, on facts, no-Whether assessee-firm entitled to registration-Held, on facts, yes Facts The assessee-firm was reconstituted by a deed of partnership dated 20-5-1967 with effect from 1-4-1967 by the introduction of new partner N. Prior to the reconstitution, there were two partners B and G having equal shares and the firm had been allowed registration. The business of the firm was of road transport from own lorries and hired lorries. The new partnership deed stipulated, inter alia, (i) that the capital was to be contributed by B and G in equal proportions; (ii) that any income and/or losses from the business done by the lorries owned by the firm were divided between B and G equally; (iii) that the net profit of the other transport business from hired lorries was to be divided amongst all the three partners and the net losses of the partnership was to be borne by them in the given proportions; and (iv) that N was to be incharge of the Durgapur and Asansol branches of the partnership. The ITO considered the terms of the partnership deed, examined N and G and came to the conclusion that the firm was not a genuine one. The ITO, therefore, rejected the assessee's claim for registration for the assessment year 1968-69. He also refused the continuation of registration for the assessment year 1969-70. On appeal, the AAC held that the conditions for valid partnership and registration thereof were satisfied and reversed the ITO's order. On second appeal, it was contended by the revenue (i) that the partnership had two distinct businesses one from own lorries and the other from hired lorries; (ii) that the shares of the partners in profits…

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