JUDGMENT
1. The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion of this Court:
1. The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion of this Court:
'Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the authorities below were not justified in refusing to register the assessee-firm ?'
2. Briefly stated facts giving rise to the present reference are as follows:
2. Briefly stated facts giving rise to the present reference are as follows:
The assessee, opposite party, applied for registration in the assessment year 1977-78. Relying upon the order passed for the assessment year 1975-76, the Income Tax Officer refused the registration. The ground taken for refusing the registration was that Shri Pramod Kumar who was inducted as partner in his individual capacity did not have any independent source of income and his explanation that the deposits were out of presents and gifts received from relations on various occasions was not supported by any evidence and there was also no evidence that Shri Pramod Kumar was able to save so much as to be able to make the deposits which were claimed to have come from him. It may be mentioned here that earlier, i e., prior to 15-11-1974, Thakur Jagdish Narain was carrying on his business as karta of his HUF in the name and style of M/s. Thakur Mahatam Rao Jagdish Narain. He entered into a deed of partnership on 15-11-1974 representing himself as karta with his son Pramod Kumar in his individual capacity, who was a coparcener. The business continued with the capital of HUF
3. Aggrieved by the order of the Income Tax Officer refusing the registration, the assessee filed an appeal. The Appellate Assistant Commissioner while allowing the appeal upheld the claim of the registration. The appeal filed by the revenue has been dismissed by the Tribunal.
3. Aggrieved by the order of the Income Tax Officer refusing the registration, the assessee filed an appeal. The Appellate Assistant Commissioner while allowing the appeal upheld the claim of the registration. The appeal filed by the revenue has been dismissed by the Tribunal.
4. We have heard Shri Govind Krishna, learned counsel for the revenue. Nobody has put in appearance on behalf of the assessee. Learned counsel for the revenue submitted that the source of deposits claimed to have been made by Pramod Kumar having been disbelieved, the firm was not entitled for registration. The submission is misconceived. It is now well settled by the Apex Court in the case of Chandrakant Manilal Shah v. CIT (1992) 193 ITR 1 that partnership can be entered into by karta of HUF with another coparcener in his individual capacity and that it is also not necessary that a person in order to become a partner should bring his capital.
4. We have heard Shri Govind Krishna, learned counsel for the revenue. Nobody has put in appearance on behalf of the assessee. Learned counsel for the revenue submitted that the source of deposits claimed to have been made by Pramod Kumar having been disbelieved, the firm was not entitled for registration. The submission is misconceived. It is now well settled by the Apex Court in the case of Chandrakant Manilal Shah v. CIT (1992) 193 ITR 1 that partnership can be entered into by karta of HUF with another coparcener in his individual capacity and that it is also not necessary that a person in order to become a partner should bring his capital.
5. In view of the aforesaid discussion, we do not find any illegality in the order of the Tribunal. The question referred to is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the revenue. However, the parties shall bear their own costs.
5. In view of the aforesaid discussion, we do not find any illegality in the order of the Tribunal. The question referred to is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the revenue. However, the parties shall bear their own costs.