Case Law Details
D.M Builders Vs ACIT (ITAT Raipur)
ITAT Raipur held that there is no bar on an individual to join a partnership firm in his representative capacity of a firm being represented by him. In short, partnership firm can be formed by partners represented by their respective firms.
Facts- The case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. During the course of the assessment proceedings, it was observed by the A.O that the assessee firm was constituted vide a partnership deed dated 05.03.2009 comprising of four partners who represented their respective firms. Partners were having 25% share in their representative capacity as a partner of their respective firms.
Accordingly, A.O assessed the assessee firm in the status as that of an “AOP”. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Apex Court held that even if a person nominated by the HUF joins a partnership, then the partnership will be between the nominated person and the other partners of the firm. It was further observed by the Hon’ble Court that where the Karta of an HUF enters into a partnership agreement with a stranger, the Karta alone in the eyes of law is the partner.
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