D.K. Kapur J.
1. This is an application under section 256(2) of the Income-tax Act, 1961, relating to the assessment year 1973-74. The Tribunal had rejected the assessed's application to be treated as a registered firm on the ground that it was not a genuine partnership and hence was not entitled to that status. The assessed's application under section 256(1) of the Act had raised as many as 18 questions before the Tribunal. The application was rejected as per order dated February 11, 1981.
2. The assessed filed an application under section 256(2) claiming a reference of four questions which are set out in paragraph 12 of the application. It is submitted in the prayer that the Tribunal should be directed to state a case regarding these four questions. A preliminary objection has been raised on behalf of the Department that these questions are not the ones mentioned in the application under section 256(i) and, thereforee, the application should be rejected. It is submitted by Mr. K. K. Wadhera that not only should the questions arise out of the Tribunal's order but they must also be first sought from the Tribunal by means of an application under section 256(1). As these four questions were not asked for, it is claimed that no mandamus can issue directing the Tribunal to make a reference. There is some substance in what has been submitted in the preliminary objection. But we have some difficulty in finding out what is the procedure to be followed if different questions are asked for. Is the application to be rejected Or, is the application to be treated as one for the same questions which were agitated in the application under section 256(1) Furthermore, is the court bound by the fact that no particular questions are asked for, under section 256(1) or 256(2) There seems to be little doubt that no new questions can be raised by the assessed at the stage of an application under section 256(2) and the case is to be confined to the self-same questions that were agitated before the Tribunal at the stage of the application under section 256(1). There is a lot of difficulty in this particular case because as many as 18 questions were sought from the Tribunal which are differently framed from the four questions now sought to be raised. Learned counsel for the assessed has urged that in fact these four questions are merely a rearrangement of the 18 questions raised earlier before the Tribunal. We think that this matter is too intricate to deal with in this particular way and none of the numerous cases cited at the Bar are of any help. The principles are so well-settled that it does not need any discussion for us to hold that the application has to be confined to the case set out before the Tribunal at the stage of its application under section 256(1). However, we have not come across a single case in which a completely different set of questions were raised at the stage of an application under section 256(2). This is an unique and an unprecedented case. We can dismiss the application on this short ground, but we think, we should examine whether there is a question of law which could be referred on merits.
3. It so happens that the 18 questions set out in the application under section 256(1) which were raised before the Tribunal are almost all questions of fact. The only real controversy before the income-tax authorities was whether the assessed was to be registered as a partnership under the provisions of the Income-tax Act or not. One question alone could have been raised, i.e., 'did the facts and circumstances of the case justify the conclusion that the applicant was not to be granted registration.'
4. Learned counsel for the assessed is quite right in submitting that there was an inadequacy of drafting when the application under section 256(1) was moved before the Tribunal, but even the questions raised before this court do not refer to the sole point that was under consideration by the Tribunal.
5. For convenience, we may now turn to the substantive order of the Tribunal passed in the assessed's appeal. The facts are quite simple. M/s. Delhi Hotels was a partnership evidenced by a partnership deed dated March 30, 1972. This partnership was dissolved by a deed of dissolution dated June 6, 1972. The question was-whether this firm should be registered for the purposes of the Income-tax Act. According to the partnership deed, the object was to set up a hotel at 1, South End Road, New Delhi. The parties to the partnership were M/s. Carvanserai Ltd., Shri Kanhaya Lal Sawhney, Shri Puran Chand Sawhney, Shri Man Mohan Sawhney and Shri Chand Mohan Sawhney, all collectively described as the second party. The capital of this partnership was to be rupees one crore to be contributed in accordance with paragraph No. 5 by the five persons, of which Rs. 51,00,000 was to be contributed by M/s. Carvanserai Ltd. and the balance by the other four persons. The property situated at 1, South End Road, New Delhi, which belonged to the second party was to be treated as the partnership property. It appears that no permission was ever obtained for building the hotel nor were any steps taken in this behalf except to write some letters and to consult some persons. In fact, the whole project ended in a dissolution within three months. The Tribunal has given an elaborate order as to whether there is a genuine partnership or not. It may be mentioned that as a result of the dissolution, the partnership property which formerly belonged to Shri Kanhaya Lal Sawhney, Shri Puran Chand Sawhney, Shri Man Mohan Sawhney and Shri Chander Mohan Sawhney, became the property of M/s. Carvanserai Ltd. and no business was carried on. So, the Appellate Tribunal came to the conclusion that the authorities below were right in coming to the conclusion that there was no genuine partnership. In fact, the only effect of the partnership was to transfer the property from one set of persons to the other. The question whether the firm is genuine or not in such circumstances is purely a question of fact and we do not think any question of law arises. We would, thereforee, dismiss the application.
6. In the circumstances of the case, we would also accept the preliminary objection on the footing that the questions of law raised in the application are not those which were raised before the Tribunal. As we find no question of law arising from the order of the Tribunal, we have rejected this application, but we confine the case to the peculiar circumstances of this case; if this was a case in which a question of law arose, but the application under section 256(2) had been differently worded from the questions raised before the Tribunal under section 256(1), we might have reached a different conclusion regarding the preliminary objection. In this case, however, we do not think that the questions, either in the original application or in the present application, are questions of law arising from the Tribunal's order.
7. We accordingly reject the application but in the circumstances make no order as to costs.