TMI Blog1998 (7) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... eing carried on under a dead of partnership executed by four partners in their individual capacities on 25-1-1980. One of the partners Shri Rajnikant B. Kothari, who was a partner in the capacity of an individual retired from the firm and he was admitted to the partnership as Karta of the HUF of Shri Rajnikant B. Kothari and a new partnership dead was drawn on 1-3-1984 and executed on 10-8-1984 and was made effective from the first day of the accounting period relevant to the assessment year 1985-86, i.e., 5-11-1983. The Assessing Officer noted that Shri Rajnikant B. Kothari was admitted as a partner in the HUF capacity with effect from the last day of the accounting year i.e., 24th October, 1984 by Hawala entry of Rs. 20,000 from the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer referred to the case of V. B. Dhanawatey v. CIT 166 ITR (sic)) and observed that the family of Rajanikant B. Kothari had no nucleous fund with the help of which income was alleged to have been earned by Rajanikant B. Kothari, as partner in representative capacity. He accordingly refused the benefit of registration to the assessee firm. 3. On appeal, the CIT(A) held that the HUF of Rajanikant B. Kothari was already there at the time of entering into partnership, because at the relevant time the Karta was married and was having sons and daughters for quite a long time. He could represent the family. Relying upon the judgment of Calcutta High Court reported in Askaran Kissenlal v. CIT [1969] 73 ITR 522, Supreme Court judgment in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Virendra Kumar Avinash Kumar v. CIT [1988] 171 ITR 263/37 Taxman 118 (All.). 7. It is well-settled law that it is open to the Karta of a Hindu undivided family as representing the family to agree to become partner with another person. In other words, a Karta enters into a partnership in a representative capacity, bears a dual capacity, one as partner as agreed to by the parties to the contract, and the other as a trustee vis-a-vis the other members of the family and for the purpose of registration, the provisions of three distinct Laws have to be considered, viz., Partnership Act, Hindu Law and Income-tax Act. The term 'Hindu Undivided Family" has not been defined in the Direct Tax Laws and, therefore, this expression must be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X
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