The mere fact that two partnership firms have the same partners and share profits and losses in the same proportion is not conclusive for a finding that the two firms are one and the same. All the material facts and circumstances of the case must be considered.

1. The same question arising in the assessment years 1975-76, 1976-77 and 1977-78 has come up for the opinion of this court on a reference made under Sec. 256(1) of the Income-tax Act, 1961, at the instance of the Revenue giving rise to these three cases constituting this batch.

2. The question of law which has come to this court for its opinion is as follows :

" Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that Shree Annapurna Electric Co. and Shree Annapurna Udyog were separate firms and in excluding the income of Shree Annapurna Udyog which had been included in the income of Shree Annapurna Electric Co. ?"

3. Shree Annapurna Electric Company, Giridih ("the electric company", for short), is a partnership firm consisting of two partners, namely, Shri Uma Shankar Chhaperia and Shri Hari Shankar Chhaperia, having equal shares in the firm. In the course of assessment of this firm, the Assessing Officer discovered that the same persons were running another partnership firm under the name and style of Annapurna, Udyog ("the Udyog", for short) which was carrying on trade and business in mica. The partners in the two partnership-firms being the same two persons, who, as their names would suggest also appeared to be related to each other, the Assessing Officer held that the electric company and the Udyog were in reality one and the same partnership firm. He accordingly added the income of Annapurna Udyog to the income of the electric company and subjected it to tax in the hands of the electric company. The assessee filed an appeal before the Appellate Assistant Commissioner who by his order dated April 16, 1977, found and held that the two partnership firms were different and separate and the income of one could not be added to the income of the other. The appellate authority accordingly directed that the income of the Udyog which was wrongly taxed in the hands of the electric company should be excluded from the income of the assessee-partnership firm. The second appeal preferred by the Revenue was dismissed by the Appellate Tribunal by order dated April 25, 1978, by which it affirmed the order passed by the appellate authority. The Tribunal, however, agreed that a question of law as quoted above arose in the facts and circumstances of this case and accordingly made this reference to this court.

4. The appellate authority and the Tribunal held and found that the electric company and the Udyog were two different and separate partnership firms on the basis of, inter alia, the following facts and circumstances :

(i) the electric company, the assessee-partnership firm was formed on April 8, 1961, whereas the other firm, the Udyog had come into existence on November 26, 1969 ;

(ii) The assessee-firm carried on business in electrical goods while the other firm carried on its trade and business in mica ;

(iii) The two firms were situated at different places ; the assessee-firm functioned from its office at Giridih, whereas the other firm had its office at Pachambha, several kilometres away from Giridih ;

(iv) The two firms maintained separate books of account and had separate and different sales tax registration numbers ;

(v) Further, the two firms employed different persons and in fact different numbers of persons as employees ;

(vi) The assessee-firm had only one staff whereas the Udyog had 7 to 8 employees and the two firms maintained separate wage registers for their respective employees.

5. On the basis of the aforesaid facts and circumstances, the appellate authority and the Tribunal held and found that the two partnership firms were different and their respective incomes could not be clubbed together. In support of this finding, reliance was placed upon a decision of the Bombay High Court reported in Vissonji Sons and Co. V/s. CIT [1946] 14 ITR 272.

6. Mr. Vidyarthi, learned counsel appearing on behalf of the Revenue, submitted that the facts and circumstances rel