TMI Blog2018 (3) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... , rule of res judicata may not be applicable to the Income Tax proceedings, but the rule of consistency demands that a position consistently taken shall not be disturbed unless there were significant change in facts. In so far as reliance placed on Section 40(b) by AO is concerned, there is nothing in that section to conclude that a partnership could not be formed by a karta of an HUF in his individual capacity with other persons. The same, in our opinion, would also apply where an individual who joins partnership in a representative capacity. " It can always be considered that he was doing so in his individual capacity. Appeal stands allowed in the hands of the appellant. - I.T.A. Nos. 1351, 1352, 1353 & 1354/Chny/2017 - - - Dated:- 26-3- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, he disallowed the interest paid to the partners and the remunerations of the working partners and completed the assessments for all these assessment years. Aggrieved the assessee filed appeals before the CIT(A). The CIT(A) relying on this tribunal decision dated 03.02.2017 for assessment year 2012- 13 allowed the appeals. 3. Aggrieved, the Revenue filed these appeals with the following common grounds: 1. The order of the Learned CIT(A) is not acceptable on the facts and circumstances of the case. 2. The Learned CIT(A) has erred in law, in deleting the disallowance on claim made u/s. 40(b). 3. The Learned CIT(A) has erred in not considering the fact that the firm comprises or three partners. namely R.Kull1aravelu (HU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or between three individuals. One more question also arises whether a valid partnership could be formed between three persons in representative capacity. Relevant clauses in partnership deed in the case of Aqua Sub Engineering read as under :- 'THIS DEED OF PARTNERSHIP entered this Twenty Fourth Day of May, one Thousand Nine Hundred and Ninety among : (1) , Mr.R. KUMARA VELU, Son of Late Mr, R. Ramaswamy, aged about 37 years, residing at 703, A vanashi Road, Coimbatore, hereinafter called 'the party of the First Part: (2) Mrs. HOMAI KUMARA VELU, Wife of Mr. R. Kumaravelu, aged about 28 years, residing at 703, Avanashi Road, Coimbatore, hereinafter called 'the party of the Second Part: (3) Dr. H.S. ADENWALLA, son-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the parties were representing any Trust or HUF. Even if we take that Shri R. Kumaravelu was representing an HUF, by virtue of judgment of Apex Court in the case of Rashik Lal Co. (supra), he could also be considered as a partner in his individual capacity. Para 13 of the judgment of Apex Court is reproduced hereunder: A Hindu Undivided Family cannot be in a better position than a firm in the scheme of the Partnership Act. The reasons that led this Coartto hold that a firm cannot join a partnership with another 'individual' will apply with equal force to a Hindu Undivided Family. In law; a Hindu Undivided Family can never be a partner of a partnership firm. Even if a person nominated by the Hindu Undivided Family j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of res judicata may not be applicable to the Income Tax proceedings, but the rule of consistency demands that a position consistently taken shall not be disturbed unless there were significant change in facts. In so far as reliance placed on Section 40(b) of the Act by the Assessing Officer is concerned, there is nothing in that section to conclude that a partnership could not be formed by a karta of an HUF in his individual capacity with other persons. The same, in our opinion, would also apply where an individual who joins partnership in a representative capacity. It can always be considered that he was doing so in his individual capacity. This position has been reiterated by Hon'ble Apex court in the case of Bagyalakshmi Co. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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