TMI Blog1990 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... from contract of Damodharaswamy Co., had been included in the individual assessment of Shri Damodharaswamy and, therefore, that income shown as that of the firm would be assessed as a protective measure. The appeal of the assessee in the individual's case was dismissed. But the appeal of the firm was allowed as a consequence by deleting the income from the total income of the firm. 3. The Revenue is in appeal against the deletion of the income from the firm's assessment while the individual is in appeal against the inclusion of the income in his total income. 4. The first question that arises for consideration is the constitution of the firm itself. A perusal of the partnership deed dt. 20th July, 1980 shows the following recital : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip actually existed prior to the execution of the document and since the cl. 2 itself shows that it should have deemed to have come into existence on 1st Jan., 1980, it is obvious that the partnership itself came into existence only on the date of execution of the deed. 5. On the basis of the document, we find that the ITO was right in holding that the firm was genuine and it was evidenced by the said deed and was, therefore, entitled to registration. This however does not preclude the ITO from questioning the existence of the partnership business and to hold that any part of that business did not belong to the firm but belonged to the individual partner. 6. On this aspect the assessee has raised on alternate plea before us, viz. that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showed capital account only in his name and not in the names of any other partners and in his letter dt. 19th March, 1985 he had explained the source of that capital as his own. Similarly, he has signed as proprietor in the letter dt. 26th March, 1985 and had also mentioned that the contract work was undertaken by his sole proprietary concern, Damodarasamy Naidu Co. in his letter dt. 20th March, 1985. It was further pointed out that the bank accounts were in the name of the individual and the partners Srinivasan and Smt. Indra were not aware of any details about the firm. However, we are of the opinion that none of the these factors would affect the position if the proprietary business had been already converted into a partnership busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance-sheet as an asset of the partnership, this would be evidence to show an agreement to treat that asset as partnership property. However, so long as an agreement is dependent upon an unperformed condition, the ownership of the property will remain unchanged." It has been held by the Supreme Court in the case of CIT vs. Ashokbhai Chimanbhai (1965) 56 ITR 42 (SC) "Profits" do not accrue from day to day or even from month to month and have to be ascertained by a comparison of assets at two stated points. Unless the right to profits comes into existence there is no accrual of profits and the destination of profits must be determined by the title thereto on the day on which they arise." It must also be remembered that since the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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