9911796707
TMI Blog1977 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... trust was to be a charitable trust and its trustees were the assessee herself, her father Sri Arjun Agarwala and her husband Sri Krishna Kumar Nathani. This Trust deed itself provided that one of the trustees on behalf of the Trust could become a partner in the partnership of West Bengal Mining Co. to the extent of one anna share in the said partnership business. The trustees were to carry on the object of the Trust and the Trust was to come to an end when the Trust's fund with all its accretion was spent in full. Though the amount of Rs. 4,01,000 was transferred to the Trust in the books of West Bengal Mining Co., the trustees of the Trust could not enter into the partnership with M/s. West Bengal Mining Co. and that firm rejected this req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he, therefore, included the whole of the share income in her hands. 4. When the matter came before the AAC, he found that the sub-partnership between the assessee and the Trust had come into existence by the end of November, 1971 and a partnership deed was actually executed on 31st December, 1971. In view of this partnership which he held to be the valid partnership, the AAC held that the share income upto the end of November belonged to Smt. Sulochana Devi Nathani, whereas after that sub-partnership was effective and there was a diversion at source of the share income to the extent of half of it. The AAC also found that the registration of the sub-partnership had been rejected for this year, but that was on the ground of the application f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, submitted that the whole income should be included in her hands. 6. As against this the learned counsel for the assessee submitted that there can be a valid partnership between the Trust and an individual and in this case the Trust itself created an over-riding title in favour of the Trust deed. It was submitted that 50 per cent of the share income stood diverted at source and should not have been included in the hands of the assessee notwithstanding that the sub-partnership had not come into existence till the end of November' 1971. The learned counsel for the assessee referred to the decision in 63 ITR (page 292) and 81 ITR (page 567). He also submitted that there was nothing in the Trust deed which could make it revocable and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a share from that firm would belong to the Trust. As already discussed this could not take place and ultimately a sub-partnership was executed on 31st December 1971, So the diversion at source in respect of the share income did not take place by the Trust deed, but a valid sub-partnership came into existence by the end of November 1971 and effect is to be given to that sub-partnership. 8. We do not find any force in the argument of the Department that there cannot be any valid partnership between an individual and a trustee of a Trust. There is no legal bar for such a partnership. A Trust can always enter into a partnership in a representative capacity. A firm is valid although a partner may divide his share of profit with his sub-partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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