2008 (7) TMI 517

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..... essment years 1998-99 and 1999-2000 dated July 28, 2004. The facts leading to this case are as hereunder: 2. The assessee is a registered partnership firm created under the pro visions of the Indian Partnership Act, 1932. Copy of the partnership deed is produced as annexure B to the appeals. It consists of four brothers and their respective spouses. Nature of the business of the firm as enumerated in the partnership deed is to carry on the business of money-lending and trading in fabrics and garments. The partners may by unanimous decision carry on any other business also. The firm came into existence on January 4, 1997. The assessee-firm filed its return of income for the assessment year 1998-99 on July 9, 1998. The case was taken up for .....

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..... 2001 dated May 19, 2004. Challenging the con current findings of all the authorities below, the present appeal is filed. 4. Though three questions of law are framed in the appeal memo, after hearing counsel for the parties, we are of the opinion that the questions of law raised are to be reframed, accordingly we have reframed the questions of law as hereunder: "Whether the authorities below were justified in not considering the income derived by the assessee as an income from its partners only and to apply the doctrine of mutuality?" 5. Mr. Parthasarathi, counsel for the assessee, contends that all the authorities did not consider that in terms of the partnership deed, the firm did not carry on the business except lending loans to its p .....

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..... any particular year, if the firm has not done any business and has extended loans only to its partners, for a particular assessment year we cannot hold that the firm is established or created for the benefit of its partners by applying the principles of mutuality. As could be seen from the order of assessment, four brothers have contributed Rs.24 lakhs each as their capital and their respective spouses have contributed Rs.1 lakh each as capital. From looking info the objects of the partnership deed, it is clear to us that the firm is not created only for the benefit of its partners by lending money to its partners but created to do other business, viz., money-lending to all third parties and to do garment business. When the object of the fi .....

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