Law: Income Tax Act, 1961

Section: 184

Section 184 of the Income-tax Act, 1961 [Corresponding to Section 26A of the Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - 'R' gave certain sum to each of his sons, by crediting said sum to his personal account in business, and thereafter a partnership deed between father and sons was executed - Excise licence stood in name of 'R' was also transferred in name of partnership - Assessee-firm filed its return for relevant assessment year alongwith an application for registration - ITO refused to register firm on ground that there was no document of gift by 'R' in favour of sons and that mere entries of credits in favour of sons in books of account would not constitute gifts - Whether having regard to relationship between donor and donee and fact that cash of Rs. 4500 got form father by each of sons was very capital of intended partnership it would have been an idle formality to hand over cash in specie to sons and sons handing them back to father - Held, yes - Whether, moreover, since, there was enough material to prove that father made a true and valid gift of sum in question to his each of six sons, partnership would not be held sham or untrue one - Held, yes - Whether, therefore, application for registration was improperly refused - Held, yes FACTS R carried on business in the manufacture and sale of safety matches as sole proprietor. On 31-3-1955, he debited his personal account in the business with a sum of Rs. 27,000 and credited each one of his six sons with Rs. 4,500. On 1-4-1955, a partnership deed between R and his sons was executed. Four of his sons were adults and majors and two of them were minors. The minor sons were admitted to the benefits of the partnership. The firm so constituted was registered with the Registrar of Firms on 23-1-1956. The excise licence which stood in the name of R was transferred to the name of the partnership by the Assistant Collector of Central Excise on application made in December, 1955. The firm submitted a return of income to the ITO. Along with the return the firm also filed an application for registration of the firm under section 26A of 1922 Act. The ITO refused to register the firm. He observed…

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