TMI Blog1986 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... 1966, respectively. A new partnership deed was executed on July 1, 1966, which was to take effect from April 1, 1966. In the new partnership, Brijmohan Lal, an earlier partner, was dropped whereas Ghanshyam Gupta and Chander Kant were shown as full-fledged partners. The firm was granted registration by the Income-tax Officer for the assessment year 1967-68, vide order dated March 28,1972. However, subsequently, on May 24,1973, the Income-tax Officer referred the case to the Commissioner of Income-tax proposing that action under section 263 of the Income-tax Act (hereinafter called "the Act") be taken for cancellation of the registration. The Commissioner after issuing notice and hearing the assessee cancelled the registration in due course. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, thus setting aside the direction of the Commissioner of Income-tax to the Income-tax Officer to frame the assessment of the assessee in the status of an unregistered firm ?" LT. Ref. Nos. 65 and 66 of 1977: " 1. Whether the Tribunal has been right in law in suo motu holding that the Commissioner of Income-tax had in his mind the admission of Chander Kant to the partnership with effect from April 1, 1966, and consequently the Income-tax Officer's order erroneous ? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in not finding it beyond the jurisdiction under section 263, the action of the Commissioner of Income-tax in cancelling the registration on the plea of a loss of Rs. 876 having been debited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneous order because if the firm is assessed in the status of an unregistered firm, the entire income is liable to be assessed in the hands of the assessee yielding larger revenue as compared to being assessed as a registered firm. No reason has been given for recording this finding and with due respect to the learned judges, we are unable to subscribe to this view. The contention raised is not of universal truth as is evident from the provisions of section 183(b) of the Act itself which says that if in the opinion of the Income-tax Officer, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the order of the Income-tax Officer erroneous on the ground that Chander Kant, minor, was shown as a full-fledged partner in the partnership deed executed on July 1, 1966, which was made effective from April 1, 1966, and as such the Tribunal was not justified in law in assuming that the Commissioner, in fact, had held the order erroneous on the said ground because a reference was made in the order of the Commissioner to the judgment of the Supreme Court in Dwarkadas Khetan and Co.'s case [1961] 41 ITR 528. The Commissioner had held that each of the two minors, Dinesh Kumar and Lalit Kumar, were debited with loss of Rs. 875.82 in the concerned year which showed that they were considered as full-fledged partners. It was after recording thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip executed was not validly constituted. Question No. 1 is accordingly answered in the negative, that is, in favour of the assessee and against the Revenue. On the second question, again the finding of the Tribunal has to be reversed. The Tribunal held that if according to the instrument of partnership, a particular minor is merely admitted to the benefits of partnership, be is not to share the losses of the firm and debiting him with any portion of the losses of the firm would be suggestive of a constitution different from the one specified in such instrument of partnership. Though the assessee referred to sub-section (3) of section 30 of the Indian Partnership Act, 1932, for the contention that there is no bar in adjusting the losses of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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