Law:

Section:

Section 185 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - Assessment year 1957-58 - Whether where an existing joint family business is alleged to have been converted into partnership between members of family, genuineness of constitution of partnership has to be established before firm could be registered - Held, yes - Whether it is not necessary that all conditions imposed by section 25A of 1922 Act for valid partition should be complied with as necessary in a case where it is claimed by assessee that an erstwhile joint family business had emerged into partnership as result of agreement between members of the family butthere shall be division between coparceners qua joint family business and division has to be proved like any other question of fact and should not be conclusively presumed from existence of instrument of partnership - Held, yes - Whether fact that entry relating to capital was made not in beginning of year of account but towards its end may not be disabling circumstance impeding rights of registration if parties have otherwise such right - Held, yes FACTS One 'S' and his sons were members of HUF which was carrying on the business. 'S' died in 1953 and his sons decided to carry on the business of the HUF. On 16-4-1956, a partnership was executed among them, constituting the family business into a partnership and admitting their brother, minor 'A', to the benefits of the partnership. Each of the three brothers was allotted one-third share in the business in accordance with their shares as coparceners of the undivided family. In the business accounts of the family separate ledger folios had been allotted in the name of each one of the brothers. The partnership deed recited that the excess credit amounts as found in the ledger folio relating to the capital of the family business should be dividend in three equal shares and each of the shares could be credited with their respective shares in the partnership accounts. On 12-4-1957, the last day of the previous year relevant to the assessment year 1957-58, the capital account was divided equally amongst all the three…

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