Law: Income Tax Act, 1961

Section: 185

Income-tax---Firm---Registration---Change in constitution---New partner included---Partnership evident from deed of' partnership---Shares of partners specified--¬Registration to be granted---Indian Income Tax Act, 1961, S.185. For the assessment year 1982-83, there was a change in the Constitution of the firm as one new partner was admitted to the partnership. Though registration was granted in earlier years, the Income-tax Officer refused registration for the assessment year 1982-83, on the ground that some partners were employees of the first partner, which was a company. On appeal, the Appellate Assistant Commissioner concurred with the Income-tax Officer. The Tribunal, on the assessee's appeal, set aside the orders of the Appellate Assistant Commissioner and the Income-tax Officer on the ground that the assessee was granted registration in the earlier years and, subsequently, there was no change except one partner being included. On a reference at the instance of the Revenue: Held, that the Income-tax Officer was to see that partnership was evident from the instrument and the shares of the partners were to be specified in the instrument. There was a proper partnership deed and all the shares of the partners had been detailed. The Tribunal's decision to grant registration was justified, though it had granted registration on a different ground. JUDGMENT This is an Income-tax reference under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the Revenue and the following question of law has been referred by the Tribunal for answer of this Court, which reads as under: "Whether; on the facts and in the circumstances of the case, the agreement, dated November 6, 1981, between S.U. Pumps (Pvt.) Ltd. and its seven employees brought into existence a valid partnership entitled to registration under section 185 of the Income-tax Act, 1961?" This reference in question is for the assessment year 1982-83. The assessee-firm carried on similar business as was done in the earlier years and registration was granted by the Income-tax Officer. For the year 1982-83, there was a change in the constitution of the firm as one new…

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