9911796707
TMI Blog1986 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that for the asst. yr. 1981-82 the ITO had allowed continuation of registration on the basis of an order of registration granted for the earlier year. The Commissioner further found that the activity carried on by the assessee, was an income from house property declared in the return. He further found that in the asst. yr. 1980-81 no business had been carried on by the assessee and even then registration had been allowed by the ITO. In view of this, he held that the continuation of registration was not valid. For this purpose action under s. 263 was taken. 3. It was found that the partners of the firm namely, Shri S. Sarin and Smt. Santosh Chhoker had entered into this partnership to carry on any business which the partners decided fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom property, it could not be assessable at all. He also rejected the plea that the assessee should be treated as owner as he had paid the full consideration. In view of this position. The CIT held the order passed by ITO to be erroneous and prejudicial to the Revenue and cancelled it with the direction given above. 6. The ld. Counsel for the assessee submitted that two appeals have been filed because the Commissioner cancelled the continuation of registration and also cancelled the assessment made by the ITO. He submitted that the registration of the firm having been allowed by the ITO for the asst. yr. 1980-81, the continuation of registration was automatic under s. 184(7) if the conditions given in that sub-section are complied with. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that there could be a valid partnership for carrying on the activity of leasing property for any other commercial asset. 7. Regarding the quantum of income, it was submitted that though the income was assessable as income from other sources as per the decision of the Delhi High Court and repair charges were not to be allowed automatically computed by the ITO was more than proper income assessable in this year as the income for more than 13 months had been included. It was contended that if the income of 12 months constituted in the previous year is assessed, the income will not be more than what has been assessed by the ITO. It was, therefore, submitted that no prejudice to the Revenue was caused by the action of ITO. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTR (P&H) 94 : (1983) 140 ITR 490 (P&H) Punjab and Haryana High Court held that the matter of continuation of registration of a firm was a proceeding under the Act and a certificate granted by the ITO would be covered under s. 263(1) of the IT Act. Noting this divergence of this judicial opinion, we may consider the facts of this case. We do not agree with the ld. Commissioner that the partnership was invalid as no business was being carried on by the firm. It is not in dispute that the firm was constituted under a Partnership Deed and the deed contemplated carrying on of business. It further contemplated that the partners could carry on any business activity. They had to distribute among themselves the profit of such activity. It appears t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses actually incurred may be considered for a deduction by the ITO. To the extent that the ITO had allowed this deduction, his order was erroneous and prejudicial to the interest of the Revenue. 11. The assessee has raised the question of the overall income assessed by the ITO. It was stated that the annual rental of the property was not as much as shown by the assessee as the assessee had included the rental for a longer period. The Commissioner has met this point by observing that the income from other sources may include any other income which may be received by the assessee and it is not confined to the rental of 12 months. We are of the view that this alone would not take away the prejudice to the Revenue as the income was taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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