Law:

Section:

Section 4 of the Income-tax Act, 1961 - Individual - Assessability of - Assessee's claim that he had only one-fourth share in partnership firm was negatived by ITO as that firm had been earlier held to be not genuine - However, High Court on reference had held firm to be genuine - Whether in view of firm being genuine, assessee's claim that he had only one-fourth share therein had to be upheld - Held, yes Facts The assessee was partner in a firm which had been held to be not genuine for the assessment years prior to 1958-59. For the assessment years 1958-59 to 1960-61, the Tribunal held that the said firm was genuine and a reference at the revenue's instance was made to the High Court. For the assessment years 1959-60 to 1961-62 the assessee's contention that he had only one-fourth share in the partnership firm as a partner was negatived by the ITO. However, the AAC upheld the assessee's claim and the Tribunal confirmed the AAC's order. On reference : Held In D.B. Income-tax Reference No. 33 of 1976, relating to the firm for the assessment years 1958-59 to 1960-61 it had been held that the said partnership firm was a genuine firm. Therefore, it followed that the assessee was simply a partner of that firm having one-fourth share. So in his personal assessment only his one-fourth share from that firm was includible as a partner and the Tribunal was justified in taking that view. B.R. Arora for the Applicant. K.C. Bhandari and A.D. Mehta for the Respondent. Order Jain, J. - In the above two references, the following question of law has been referred to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that only one-fourth share from the firm Manaklal Porwal was includible in the assessment of Shri Manaklal Porwal in his individual capacity?" 2. We may state a few facts giving rise to the above references. In respect of the two assessment years prior to 1958-59, a finding was reached that Manaklal Porwal is not a genuine firm and on that basis registration was refused. That finding was subsequently changed in respect of the assessment years 1958-59 to 1960-61 and on the direction by this…

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