Law:

Section:

Section 185, read with section 256 of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment year 1978-79 - Tribunal earlier had held that assessee firm was not genuine - Subsequently, on rectification application filed by assessee, Tribunal took into consideration material on record which it had failed to consider earlier and concluded that assessee-firm was genuine and granted it registration - Whether Tribunal's finding was purely a finding of fact and no question of law arose therefrom - Held, yes FACTS The assessee claimed the status of a registered firm on the basis of a deed of partnership. On a consideration of the material gathered by the ITO, he came to the conclusion that no genuine firm styled as in name of assessee firm came into existence and that this entity was only a branch business of the firm already existing. He, thus, completed the assessment of the assessee in the status of an "AOP" and included the income of the assessee in the assessment of existing firm. The AAC confirmed the order of the ITO. On further appeal, the Tribunal initially found that the firm was not genuine and confirmed the order of AAC. However, on application under section 254(2), the Tribunal set aside its earlier order and directed that the appeal which had been decided and disposed of by it would be reheard. Thereafter, the Tribunal reheard the appeal on merits and held that the firm was a genuine firm and directed the ITO to grant registration. The revenue's application under section 256(1) was rejected. On application under section 256(2): HELD The Tribunal, after rectifying its mistake and taking into consideration the material on record, which it had failed to consider earlier had come to a conclusion that the assessee-firm was a genuine firm. This was purely a finding of fact and in such a situation, no question of law as such arose. Note: The decision is in favour of the assessee. CASES REFERRED TO Chimanlal Umaji v. CIT [1980] 121 ITR 507 (MP), CIT v. Chander Bhan Harbhajan Lal [1966] 60 ITR 188 (SC), CIT v. M.P. Bidi Leaves & Company [1983] 144 ITR 487 (MP), CIT v. Mithalal Ashok Kumar [1986] 158 ITR 755 (MP), India Cements Ltd. v.…

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