The Commissioner of Income Tax, Tamil Nadu-II, Madras vs M/s. K.T.S. Nagamanickam Chettiar, Namagiripet, Salem

In this tax case reference under S. 256 (1) of the Income Tax Act, 1961, at the instance of the Revenue, the following question of law has been referred to this Court, for its opinion:

Whether, on the facts and circumstances of the case, the assessee firm consisting of the Kartha of the Hindu Undivided family as one of the partners and four other coparceners of the said Hindu Undivided family as other partners, was a validly constituted firm and was entitled to registration for the assessment year 1975-76

In respect of the same assessee, though in relation to another assessment year, the identical question came to be considered by this Court in the decision reported in the Commissioner of Income Tax, Tamil Nadu v. K.T.S. Nagamanickam Chettiar 148 income tax Reports 115. On a consideration of the facts as well as the relevant provisions of the income tax Act, this Court held that there can be a valid partnership between the Kartha of HUF and some of its coparceners and consequently, there was a valid partnership entitled to registration under S. 185(1) of the income tax Act, 1961 and therefore the Tribunal was right in the view it took that the firm was entitled to registration. In relation to the assessment year in question, the same principle would apply and there is no dispute as regards this. In view of this, the question referred to has to be answered in the affirmative and against the Revenue. There will be no order as to costs.