COMMISSIONER OF INCOME-TAX vs. KAMDHENU

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ITR/342/1983HC GujaratGJHC24011810198329 November 1996Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE R.BALIA2 pages

AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was right in law in holding that the assessee partnership firm was entitled to continuation of registration. The Court's reasoning was based on the principle established in its own prior decision in CIT vs. Budhalal Amolakdas (1981 129 ITR 97). This precedent held that the same individual can be a partner in a firm in two different capacities. The Court further noted that this same principle had been applied to the assessee's own case for the earlier assessment year 1975-76. Therefore, the question referred to the Court was answered in the affirmative, in favour of the assessee and against the revenue. No costs were awarded.

What were the facts?

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench referred a question of law to the High Court of Gujarat concerning the assessment year 1976-77. The assessee, M/s. Kamdhenu, Ahmedabad, is a partnership firm. The assessing officer had declined to register the firm because one individual, Shri Kartikeya V. Sarabhai, was shown as a partner in two separate capacities, representing two different Hindu Undivided Families (HUFs). The revenue's contention was that this dual representation by the same individual prevented the firm's registration. The ITAT, however, did not accept the revenue's stance and ruled in favour of the assessee, leading to this reference.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee partnership firm was entitled to continuation of registration? (Question of law) Assessee's Contention: The assessee argued that the firm was entitled to continuation of registration. This contention is implicitly supported by the Tribunal's decision in favour of the assessee. Revenue's Contention: The revenue contended that the assessing officer was justified in declining to register the firm because Shri Kartikeya V. Sarabhai was shown as a partner in two distinct capacities, representing two different HUFs. The revenue's argument was that this situation precluded the firm from being registered under the Income Tax Act.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE NO. 342 OF 1983

The Commissioner of Income-Tax Gujarat-II, Ahmedabad .. Applicant

Versus

M/s. Kamdhenu, Ahmedabad .. Respondent

Date of Decision : 29th November 1996

For Approval and Signature

THE HONOURABLE MR. JUSTICE R.K. ABICHANDANI

THE HONOURABLE MR. JUSTICE RAJESH BALIA

Whether Reporters of Local Papers may be allowed to see the judgement?

To be referred to the Reporter or not?

Whether Their Lordships wish to see the fair copy of Judgement?

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder?

Whether it is to be circulated to the Civil Judge?

Mr. Bharat J. Shelat for Mr.Manish R. Bhatt for applicant Mr. D.A.Mehta with Mr. R.K.Patel & B.D.Karia for respondent

Coram : R.K. Abichandani and Rajesh Balia, JJ 29th November 1996

Oral Judgement (Per Rajesh Balia, J)

At the instance of the Commissioner of Income Tax, Ahmedabad, the Income Tax Appellate Tribunal, Ahmedabad Bench `A' has referred the following question of law for the opinion of this Court which arose out of its order in ITA No. 435/Ahd/1982 relating to assessment year 1976-77:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee partnership firm was entitled to continuation of registration?"

The firm is consisting of three partners Shri been applied to the petitioner's own case for the earlier assessment year 1975-76 by this Court in Income Tax Reference No. 64 of 1983. 4. In view of the aforesaid, the question referred to us is also answered in affirmative, that is to say, in favour of the assessee and against the revenue. No costs.

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