TMI Blog1988 (4) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector of Customs Central Excise, Chandigarh - 1983 E.L.T. 1994 (CEGAT) held that even though the two partners of the two respondent firms were common the units were separate and their clearances could not be clubbed. He held them separately eligible to benefit of exemption under Notification 105/80, dated 19-6-1980 to the extent of clearances of Rs. 30 lakhs. He thus set aside the demand and allowed the appeals. Aggrieved with this decision the Revenue has filed these appeals to the Tribunal. 3. At the hearing of the appeals Smt. J.K. Chander, JDR for the appellant and Shri Y.N. Chopra, Consultant for the respondents were heard and papers perused. 4. Smt. Chander submitted that the decision of the Tribunal in G.D. Industrial Engineers, Faridabad had been challenged before the Supreme Court and till the matter was decided the Collector (Appeals) should not have hastened into a decision. Shri Chopra relying on the same decision submitted that the Collector (Appeals) was right in holding that the clearances of the two respondents could not be clubbed. The Bench put it to both the parties as to what they had to submit in view of the very recent decision of the Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 9,21,496.89. Value of clearances of the other firm M/s. Paper Packing Industries, Gangyal, Jammu during the same period exceeded Rs. 60 lakhs. This firm had availed of exemption to the extent of Rs. 30 lakhs in terms of Notification 105/80, dated 19-6-1980. Show cause notice raising demand Rs. 73,719.75 and alleging that M/s. Packart was not eligible to separate exemption under the notification was issued against the respondents. The two respondents took up pleas like being separately registered industrial units for income-tax and sales tax purposes and therefore their clearances not being clubbable. The result of adjudication and appeal has already been set out above. 6. At this stage it is necessary to briefly refer to the relevant notification. Notification 105/80, dated 19-6-1980 superseding Notification 89/79 dated 1-3-1979 exempted goods falling under Item 68 in respect of the first clearances of the said goods for home consumption by or on behalf of a manufacturer from one or more factories upto a value not exceeding rupees thirty lakhs, cleared on or after the first day of April in any financial year, from the whole of the duty of excise leviable thereon subject to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 402, Romer L.J. said that for taxing purposes a partnership firm" is treated as an entity distinct from the persons who constituted the firm". This dictum was approved by the House of Lords in Income Tax Commissioner for City of London v. Gibbs 10 ITR Supp. 121, and was accepted as good law in India in respect of a partnership firm under the Indian Income Tax Act, 1922 in A.W. Piggies Company (supra). What that implies is that for the purposes of assessment to tax the income of the partnership firm has to be assessed in the hands of the firm as a single unit, the first itself being treated as an assessable entity separate and distinct from the partners constituting it. The firm is an assessable unit separate and distinct from the individual partners, who as individuals constitute assessable units separate and distinct from the firm. It is on that basis that the provisions of the tax law are structured into a scheme providing for the assessment of partnership income. We do not think the principle goes beyond the purposes of that scheme. It does not confer a corporate personality on the firm. Beyond the area within which that principle operates, the general law, that is to say, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts profits. It is the relationship between those persons which constitutes the partnership. The relation is founded in the agreement between them. The foundation of a partnership and, therefore, of a firm is a partnership agreement. A partnership agreement is the source of a partnership; it also gives expression to the other ingredients defining the partnership, specifying the business agreed to be carrieet on; the persons who will actually carry on the business, the shares in which the profits will be divided, and the several other considerations which constitute such an organic relationship. It is permissible to say that a partnership agreement creates and defines the relation of partnership and therefore identifies the firm. If that conclusion be right, it is only a further step to hold that each partnership agreement may constitute a distinct and separate partnership and therefore distinct and separate firms. That is not to say that a firm is a corporate entity or enjoys a juristic personality in that sence. The firm name is only a collective name for the individual partners. But each partnership is a distinct relationship. The partners may be different and yet the nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporate entity or enjoys a juristic personality, partnership law in absence of any modification of the same by Central Excises Salt Act, 1944 or Rules would have to be applied. We have already set out above that the second partnership came into existence white notifications based on value of clearances and investment on plant and machinery were operative. The first partnership dated 16-3-1977 in continuation of earlier partnership deed dated 20-5-1974 stated that the business of the firm shall be manufacturing and selling of paper packing materials and such other business as may be decided amongst the partners from time to time. Clause 3 of the partnership deed also stipulated that business of the partnership firm shall be carried at Jammu or at such place or places as may be decided from time to time by the partners. In this partnership profit and loss of the firm was to be divided amongst two partners Shri Gopal Magotra and Shri Shrikumar Sharma in proportion of 50% each. In view of the terms and conditions of the partnership aforesaid, it is not understandable why it became necessary to constitute another firm for manufacturing and selling of paper packing materials inductin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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