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TMI Blog1966 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 58, a partition deed was executed, under which properties were allotted to Rangappa Setty, his wife and his three sons. One of the properties so allotted was the shop in which Rangappa Setty conducted his business. The contention of the assessee was that by the execution of the partition deed in this way, there was a throwing of the self-acquired properties of Rangappa Setty into the hotchpot of a Hindu joint family and the coming into being of a partnership between Rangappa Setty, his wife and two of his sons. But the Income-tax Officer repelled these contentions and assessed the income from both the properties as well as from the business as the individual income of Rangappa Setty. The Appellate Assistant Commissioner, who did not discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not necessary for us to investigate the question whether there was any such declaration or whether the self-acquired properties of Rangappa Setty became the properties of a Hindu undivided family by any other process. We find from the partition deed which was executed on December 8, 1958, that the properties, whose income was assessed during all the earlier periods as the individual income of Rangappa Setty, were subjected to distribution between Rangappa Setty, his wife, Danamma, and his three sons. The resulting position emerging from the distribution made in that way is that the properties, which until December 8, 1958, were the sole and exclusive properties of Rangappa Setty, became distributed between himself, his wife and his three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngappa Setty in the conduct of the business of the shop, out of the net profits, a two annas share should be paid to Danamma, wife of Rangappa Setty, a four annas share to Chennappa and another four annas share to Manjunath. At one stage the argument constructed was that this provision for the distribution of profits between Rangappa Setty, his wife and his two sons brought into being a partnership and that, therefore, a partnership came into existence on December 8, 1958. That was also the view which found favour with the Appellate Tribunal. But it is obvious that the recital in the partition deed, or the arrangement made by it, for the distribution of profits in this manner cannot establish a partnership. A partnership is a relationshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that business and he was under an obligation to pay a portion of the profits to his sons and wife in a certain contingency. But Mr. Srinivasan strenuously contended before us that there was very satisfactory evidence of the partnership having come into existence with effect from December 8, 1958, in a partnership deed which was executed on November 18, 1959. The terms and conditions which that instrument of partnership sets out make it abundantly clear that at least from November 18, 1959, a partnership came into being between Rangappa Setty and his two sons, Chennappa and Manjunath. Of that there can be very little doubt. That partnership deed clearly indicates that these three persons share the profits of the business carried on by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of partnership that the partnership shall be deemed to have come into existence on and with effect from December 8, 1958. Mr. Srinivasan contended that no sufficient investigation was made by any one in these proceedings into the question whether independently of the arrangement recorded in the partition deed for the distribution of profits, a partnership came into existence by some other process. We do not think that this submission is substantial since it is clear from the order of the Income-tax Officer and from the order of the Tribunal that the foundation for the contention that there was a partnership on December 8, 1958, was what was contained in the partition deed. The assessee made no attempt to establish that the partnership was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to him under the partition deed executed on December 8, 1958, it was possible for Rangappa Setty and his two sons to become partners in respect of that business. It is not necessary for Rangappa Setty to convert his self-acquired property into family property before he could enter into a partnership in respect of that business with his two sons. In that view of the matter, the importance which was given to the question as to whether the properties became properties of a Hindu undivided family was unjustified. We have come to the conclusion that on November 18, 1959, a partnership was indeed and in truth formed between Rangappa Setty and his two sons. So the assessment with respect to the income of the business, which was carried on in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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