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Section 256 of the Income-tax Act, 1961 [Corresponding to section 66 of Indian Income-tax Act, 1922] - High Court - Reference to - Whether if there are two separate businesses by two different firms composed of same partners having identical shares, these will be two different assessable units - Held, yes - Whether however, question as to whether business is one or separate is a question of fact to be determined after taking in consideration of all relevant material - Held, yes FACTS Two partnership firms having common partners and identical shares, carried on two separate businesses, one relating to manufacture and sale of hosiery goods while the other relating to manufacture and sale of woollen yarn. For the assessment years 1958-59 and 1959-60, the ITO held that there being common partners of both the firms, the two units constituted one assessable unit for purposes of income-tax. On appeal, the AAC passed orders in assessee's favour. On revenue's appeal, the Tribunal restored the ITO's order, on the ground that two partnerships having common partners and identical shares constituted in the eye of law one unit and the income earned by them had to be assessed collectively. On reference : HELD Whether the business was one or separate was a question of fact which could only be determined by the Tribunal after taking into consideration all the relevant materials. If there were two separate businesses by the two firms composed of the same partners having identical shares they were two different assessable units. The Tribunal, in the instant case, had also taken the view that no question of there being two businesses could arise if the owner of the two businesses was the same. Whether there was interlacing or interlocking between the two firms would be a matter for decision when the question of fact came up for adjudication before the Tribunal for the present, the two partnership firms having common partners and identical shares, were, as a matter of law, not one. Note : The case was decided in favour of the assessee. CASES REFERRED TO Vissonji Sons and Co. v. CIT [1946] 14 ITR 272 (Bom.), Martin & Co. AIR 1929 Cal. 753 (SB) and Jaisingbhai Ujamshi v. CIT…

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