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TMI Blog1970 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 1962-63, the corresponding accounting period being the financial year April 1, 1961, to March 31, 1962. The instrument of partnership is dated March 30, 1962. The partnership consisted of four partners of whom No. 1, Sayyad Hafeez Saheb, was the managing partner; No. 2, Abdul Warris Saheb, was the financing partner and Nos. 3 and 4 were the working partners. The deed of partnership provided for the sharing of profits and losses in accordance with the shares of the partners as defined under the deed. The Income-tax Officer refused registration of the firm on the ground that, in view of the provisions of clause 5 of the deed of partnership, the element of agency required to constitute a partnership was lacking. That view of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred with the power to admit new partners, raising additional funds and loans, etc., for the business and the power to expel any of the working partners if it is found that their continuance in the firm is detrimental to the interest of the firm and further that the working partners have to seek advice from the managing partner and act accordingly in all important matters. Section 20 of the Partnership Act, 1932, hereinafter called " the Act provides that the partners in a firm may by contract between them extend or restrict the implied authority of any partner. Section 31 provides that subject to contract between the partners and to the provisions of section 30 no person shall be introduced as a partner into a firm without the consent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Evans, a provision in the articles of partnership conferred power of expelling a junior partner on a senior partner and that power was held to have been validly exercised. In Balubhai Gulabdas Navlakki v. Commissioner of Income-tax, the instrument of partnership conferred power on a partner to introduce a new partner or to dismiss an existing partner by giving notice. In the said case, it was held that if the two essential conditions which are necessary to found the relation of partnership, viz., (1) that there should be an agreement to share the profits as well as the losses of the business, and (2) that each of the partners should be acting as an agent of all, exist then the other conditions which confer a larger share to one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w partners with out the consent of all the original partners. In Commissioner of Income-tax v. K. D. Kamath & Co., relied an by the Tribunal on the facts of the particular case, it was held that the element of agency was lacking. The terms of the deed of partnership in the said case are not similar to the terms of the deed in the instant case. The said decision is under appeal before the Supreme Court. In the instant case, clause 5 of the deed of partnership is not repugnant to the provisions of the Act and it cannot be said that, in view of the provisions of clause 5, the element of agency is lacking. Therefore, the Tribunal was not right in the view it has taken that no valid partnership has been constituted under the instrument of part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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