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TMI Blog1980 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... and admittedly he was representing his family. In other words the profits arising from the partnership firm belong to the joint family consisting of himself and other members. On 31st March, 1973 there was a partial partition with respect to the capital standing in his name in the firm amongst the members of the family viz., himself, and his sons. The partition took place in the accounting year relevant to the asst. yr. 1973-74. A claim for recording partial partition was made and an order under s. 171(3) was passed by the ITO. The Karta continued to remain as partner in the partnership firm without any change being affected. In other words, there was no change vis-a-vis the partnership firm. But the change was there in respect of share inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n payable to you each year shall be in a sum equal to 1/3rd of my share income from the firm of M/s. G.Konda Reddy & Co., necessary adjustment shall be made in the books of the same. It was further agreed that you shall not be responsible for losses if any, that may come to my share in any year from the said firm. This arrangement shall remain in force till such time we determine". This agreement further shows that it came into effect from 1st April, 1973 and is, therefore, relevant for the asst. yr. Under appeal. The agreement further indicates that Yugendhara Rao should part with 1/3rd of his share of profit from the firm of M/s. G.Konda Reddy & Co. 3. The ITO did not accept the plea of the assessee that 1/3rd of his share of profit bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was only intention to divide capital and not profit sharing. (3)There was only application of income after it was earned and reference was made to the decision of the Supreme Court in the case of K.A. Ramachar & another. (4) (4)There is a sub-partnership which has come into existence by virtue of the agreement entered into by the parties after the partition. Support is taken for the proposition from the decision of the Gujarat High Court in the case of CIT vs. Mahendrasingh Mohansingh. (5) 6. So far as the first objection raised by the ld. Departmental representative is concerned we feel that there is no merit in this. The High Court has gone to the extent of saying that the father cannot affect a partial partition. In our opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Rao with other family members and there was no body of individuals much less an association of person. 9. The last ground is actually a new plea put forth by the ld. Deptl. Rep. on the strength of the latest decision of the Gujarat High Court. But on a careful reading of the judgment of the Gujarat High Court, it is found that the facts are totally different. Their Lordships found mutual agency. Their Lordships distinguished the decision in 107 ITR 91.(2) In our opinion the decision of the Gujarat High Court cannot apply to the facts of the present case. 10. Thus we hold that the share income received by Yugendhara Rao from the partner-ship firm cannot be assessed in its entirety in his hands. In other words, the assessee's claim succee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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