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1. These are assessee's appeals by special leave from the common decision of the Madhya Pradesh High Court. on the three references made to it under Section 66 of the Income-tax Act, 1922 ('Act' for short). The year of assessment is 1958-59 corresponding to the accounting year ending with August 28, 1957. One Muralidhar had two sons, Ratanchand and Darbarilal. Ratanchand had two sons, Jaykumar and Abhaykumar, while Darbarilal had one son by name Dhanyakumar. Dhanya-kuniar in his turn had four sons, namely, Keshavkumar, Prasannakumar, Sunilkumar and Sudhirkumar. Branches of Ratanchand and Darbarilal had long separated. On March 1, 1943, a firm by name M/s. Ratanchand Darbarilal was constituted at Katni with Dhanyakumar and Jaykumar as its partners and these two represented their respective families. The firm carried on business in textile goods and in due course acquired substantial properties out of contributions made by the two Hindu Undivided Families. In 1950, a separate retail shop by name Premier Cloth Stores was opened at Katni by the firm. Similarly, in 1953-54, a branch was opened at Satna for handling cloth business. On November 1, 1956, under a partnership deed, the Satna business was taken over by a firm consisting of three partners, namely, Dhanyakumar, Jaykumar and Abhaykumar and the partnership was deemed to have begun from September 9, 1956. Prasannakumar was admitted to the benefits of the partnership as he was then a minor and the firm business at Satna was run in the name of Savai Singhai Ratanchand Darbarilal. On April 1, 1957, under a separate deed the business at Katniboth the main as also the branchwere taken over by a firm of four partners, viz., Dhanyakumar, Jaykumar, Abhaykumar and Keshavkumar. In the partnership deeds of Satna Katni there was no reference to the business at the other place.

2. Separate applications for registration of the two firms in the assessment year 1958-59 were made. The Income-tax Officer rejected both. In rejecting the application of the firm at Satna with which we are concerned in these appeals, he took the view that the business at Satna was only a branch of the main business at Katni. Against the order of the Income-tax Officer under Section 26A of the Act, the assessee appealed to the Appellate Assistant Commissioner. He upheld the refusal by the Income-tax Officer by holding that some of the members of the two Hindu Undivided Families had been introduced as partners without effecting partial partition of the two families. He also made reference to the capital account which stood in the name of the Hindu Undivided Family and had not been divided. He found that there was a capital account in the name of the Hindu Undivided Family and there were no relevant entries showing partial partition. In regard to the Katni business he also found a similar set of facts. According to him since the members of the firm had previously been assessed in the status of Hindu Undivided Family without effecting a partition some of the members of such Family could not form themselves into partnership firms. The assessee appealed to the Tribunal and maintained that the firm at Satna was genuine and the Satna business was totally separate from the business run at Katni from before; there was no need in law for partial partition of the family before some of the members of the family constituted themselves into a partnership firm. The Tribunal examined the rival contentions at length and came to hold that the Satna business had separate entity and there was no sustainable objection against the claim for registration. The Tribunal found, inter alia :

The assessees have effectively separated the business of Satna from the business of Katni and there is no justification whatsoever for treating the two businesses as one single whole. The aspects emphasized by the Income Tax authorities are not such as to justify the clubbing of the two units. There was nothing to stop the Satna Branch from purchasing a small portion of its requirement from the Katni business without impairing its separate individuality. The financial arrangement made by the two businesses also did not establish the merging of the two units. If the Katni business transferred some of its borrowed moneys to Satna business without charging interest, that might justify disallowance of a part of the interest on borrowed moneys claimed by Katni business. But that could not convert the Satna business into a branch of the Katni business. Similarly, intimation to the banks was not decisive in the matter especially when the existing intimation did not run counter to the Constitution of the Satna firm as claimed. The name of Satna business was not changed and the partner who had authority to operate continued to be a partner in that business. The only remaining consideration was about the introduction of capital. Assuming that it was done in a clumsy manner, we do not see how it can jeopardise the claim of Satna business to be independent. The new entrants, namely, Dhanyakumar (perhaps Keshavkumar) and Prasannakumar could well have been partners admitted to the benefits of partnership without introducing any capital at all. We are, therefore, of the view that the objections raised by the Income Tax authorities to the Satna business being converted into an independent entity are not strong or sufficient to justify the rejection of the assessee's claim. The Satna business has, therefore, to bo taken as an independent unit with its own constitution. The firm running that business has been constituted under a partnership deed with well defined terms and conditions. The Constitution is clearly different from the Constitution of the firm controlling Katni business. We would, therefore, treat the Satna business as separate and distinct from the Katni business. We do not find any valid objection against the registration of the firm owning the Satna business. The profits have been divided in accordance with the provisions of the partnership deed and the entries in the books of accounts of the business were also substantially correct. We would, therefore, direct that the firm owning the Satna business should be registered.

7. We have extracted in the earlier part of this judgment the conclusions of the Tribunal reached in paragraph 5 of its judgment. When analysed, it shows that every aspect which had weighed with the Income-tax Officer and the Appellate Assistant Commissioner for refusing registration has been dealt with by the Tribunal. The Tribunal did take notice of the fact that the name of the Satna business had not been changed and the same partner who had authority to operate the account earlier continued to exercise authority even when the firm came into existence; the Bank had not been intimated about the firm getting differently constituted but the Tribunal came to hold that not giving such intimation was not decisive especially when the existing information did not run counter to the Constitution of the Satna firm as claimed. The question of introduction of capital also received special consideration in the hands of the Tribunal. On the basis of the material placed and available on the record, the Tribunal did reach the conclusion that the Satna business was an independent one with its own Constitution and the firm had been constituted under a deed with well defined terms and conditions. A further finding was recorded that the Constitution of the Satna firm was different from the Constitution of the firm controlling the Katni business. The Tribunal recorded a further finding that the profits had been divided in accordance with the provisions of the partnership deed and appropriate entries in the books of account had been made. The explanation regarding the change in the date which had been adversely commented upon by the Appellate Assistant Commissioner appears also to have been reconsidered by the Tribunal and the Tribunal came to the conclusion that there was nothing clandestine about it. We were told by Mr. V.S. Desai, learned Counsel for the assessee-appellant, that the accounts were maintained in the local language and according to the Samvat year. There was actually no correction in the originals but when accounts were translated into English to be furnished as required by the Income-tax Officer, the mistake was detected in the copy and to indicate the corresponding year the correction had become necessary. The Tribunal appears to have accepted such explanation to brush aside the finding of the Appellate Assistant Commissioner in this regard.