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2016 (8) TMI 741 - KERALA HIGH COURT

2016 (8) TMI 741 - KERALA HIGH COURT - TMI - Partnership firm - profit sharing ratio - Applicability of section 13(b) of the Indian Partnership Act on a firm - Held that:- The provisions of section 13(b) of the Partnership Act and clause 7 of the partnership deed dated 16.9.1981, this Court held that section 13(b) of the Act would apply only when there is no contract to the contrary and that a look at clause 7 of the Partnership deed would show that there is a contract to the contrary. Proceedin .....

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n 13(b) of the Partnership Act would not apply. Consequently, the Tribunal's order dismissing the appeals of the Revenue cannot be interfered with as illegal. - Decided in favour of assessee. - I.T.A.Nos.1170, 1370, 1387 & 1391 of 2009 - Dated:- 21-6-2016 - ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ. FOR THE APPELLANT : ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX FOR THE RESPONDENT : ADV. SRI.ANIL D. NAIR, ADV. SMT.NIVEDITA A.KAMATH JUDGMENT Antony Dominic, .....

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on 13(b) of the Indian Partnership Act is not applicable to M/s.Saraf Trading Corporation where the assessees are partners. It is aggrieved by this order, the Revenue has filed these appeals and the question raised is regarding the correctness of the finding of the Tribunal on the applicability of section 13(b) of the Indian Partnership Act. 2.We heard learned standing counsel for the Revenue and the learned counsel for the assessee. 3. The main contention raised by the learned counsel for the R .....

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tended that the conclusion arrived at by the Tribunal that this Court has already declared that section 13(b) of the Act would not apply to the assessee is illegal and incorrect. 4.However, among the aforesaid two judgments, we find that in the judgment in Nalini V.Saraf (supra), this Court has considered the very same issue and held thus: So far as the first question is concerned, the assessing authority held that section 13(b) of the Partnership Act applies and hence all the partners share pro .....

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while interpreting this clause held as follows (headnote): it was not the basis alone, but the factum of the agreement specifying share ratio in profits/losses that is necessary to exclude the right in share profits/losses equally. If upon scrutiny it was found that no contract specifying the share ratio in profits/losses was made after September 16, 1981, to distribute profits/losses for the assessment year 1982-83, then section 13(b) would apply. Neither the Assessing Officer nor the Appellat .....

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