KD Kamnath And Company v/s CIT
Case number: (From Andra Pardesh High court ), Civil Appeal No. 1242 of 1968
Year: October11,1971

Bench:

1. Hon'ble Justice P. Jaganmohan Reddy
2. Hon'ble Justice C. A. Vaidialingam

Date of Judgement: October 11,1970

Facts Of the case:
The appellant is a firm consisting of six partners and the partnership was constituted under the document dated March 20, 1959. The business of the partnership, as recited in the deed, is stated to have been carried on in partnership from October 1, 1958. The partnership was registered under the Indian Partnership Act, 1932 (hereinafter to be referred as "the Partnership Act"), on or about August 11, 1959.

For the assessment year 1959-60, corresponding to the previous year ending March 31, 1959, the appellant filed an application to the Income-tax Officer, " A " Ward, Dharwar, under section 26A for registration of the partnership in the name of M/s. K. D. Kamath and Co. The Income-tax Officer, by his, order dated September 28, 1960 declined to grant registration on the ground that there was no genuine partnership brought into existence by the deed of March 20, 1959, and that the claim of the firm having been constituted is not genuine.

The said officer further held that the business should be held to be the sole concern of K. D. Kamath. For coming to this conclusion, the Income-tax Officer has mainly relied on clauses 8, 9, 12 and 16 of the partnership deed. Though the Income-tax Officer has used a loose expression that there is no genuine partnership, the sum and substance of his finding is that there is no relationship of partners inter se created under the said document.

Issue:

• Whether the deed dated March 20, 1959, and marked exhibit A is an instrument of partnership on the basis of which the appellant firm is eligible to be granted registration under section 26A of the Indian Income-tax Act, 1922

Held:
In the result, we answer the question of law in the affirmative and in favour of the assessee. This answer given by us to the question referred to the High Court by the Income-tax Appellate Tribunal will be substituted in the place of that given by the High Court. We accordingly reverse the judgment and order of the High Court and allow the appeal with costs here and in the High Court.