Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of fact - Two separate partnership firms were constituted under two separate deeds of partnership - One firm was carrying on business in lorry transport and other was exhibiting films but partners of both firms were same - ITO assessed both firms together in a single assessment on ground that one firm advanced funds to other firm - However, Tribunal on examination of factual circumstances held that both firms were separate and two different entities and they could not be assessed together - Whether any question of law arose from Tribunal's order - Held, no Facts There were two separate partnership firms constituted under two separate deeds of partnership. One firm was carrying on the business in lorry transport and the other firm was carrying on the business in the exhibition of cinema films. The partners in both the firms were the same. The ITO made a single assessment clubbing the income of both the firms on the ground that one of the firms had advanced monies to the other firm. On appeal, the Tribunal observed that there were enough factual circumstances leading to the belief that both the partnership firms were separate and the mere circumstance that one partnership firm lent funds to other partnership firm could not lead to the conclusion that both the partnership firms were the same and the ITO could not make single assessment clubbing the income of both the firms. Further, the reference application was also rejected. On an application under section 256(2): Held The matter should first be examined to ascertain whether under the partnership law there are two separate firms. If the enquiry under the partnership law reveals that there are two separate firms duly constituted for carrying on business, then the further question arises as to whether the two partnerships could be considered to be one partnership for the purpose of tax assessment under the Act. In the instant case, the conclusion that the two partnership firms constituted one indivisible firm was reached on the basis of single circumstance, namely, one of the partnership firms advanced funds to the other partnership firm for…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492