Law:

Section:

Section 185 of the income-tax act, 1961-Firm-Registration-Cancellation of- HUF business was converted into partnership business without any partition of assets-Partnership consisted of karta representing huf and two other members of huf who were working partners but did not contribute any capital-ITO granted registration but clubbed share incomes of three partners while assessing HUF-Commissioner suo motu cancelled registration on the ground that two partners other than karta did not bring in separate properties into partnership-Whether tribunal was justified in restoring registration-Held, on facts, yes Section 255(3) of the income-tax act, 1961-Appellate tribunal-Procedure of-Whether a single member could be authorised to dispose of an appeal even if it did not involve computation of total income of assessee-Held, yes Facts A certain business being carried on by a HUF through its karta and assessed as such, was, with effect 1-4-1970, converted into a partnership business. According to the partnership deed, the partnership consisted of the karta representing the said HUF and his two sons, described as working partners. The ITO granted registration to the partnership firm, but while assessing the HUF, clubbed the share incomes of the three partners on the ground that there was no partition either complete or partial. The AAC, on appeal, upheld the ITO's orders. The Additional Commissioner, acting suo motu under section 263, held that a legal partnership could subsist as between the undivided coparceners of a family only if they first divided the joint property in respect of which the partnership was entered into. The Additional Commissioner further held that since the two members other than the karta did not bring any property of their own into the partnership, the firm was not entitled to registration. The Tribunal, however, allowed the assessee's appeal, and held that prior partition was not a pre-condition to the formation of a partnership between the karta and the members of the HUF. On reference, the revenue challenged the Tribunal's decision on merits as well as on the ground that since the instant case did not involve any computation of income, a single…

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