9911796707
TMI Blog1974 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... istration was renewed up to the assessment year 1961-62. On April 13, 1960, there was a partial partition in the family of one of the partners, i.e., Shanthi Nainar. That family in addition to the 13/18ths share held by Shanthi Nainar in the assessee- firm, was having a separate wholesale business in handloom cloth. The said business as well as the interest of Shanthi Nainar in the assessee-firm were the subject-matter of the said partial partition. As per the said partition, the separate business in handloom cloth and the 13/18ths share in the assessee-firm dealing in the silk cloth were converted into a partnership business of Shanthi Nainar and his three sons by an instrument of partnership dated May 2, 1960. There was, however, no chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not specify the individual shares of the partners ; and (3) that the share of profits has been all along treated as the income of the firm of Shanthi Nainar and his sons showing that the newly constituted firm of Shanthi Nainar and his sons is the real partner in the assessee-firm. The assessee-firm took the matter to the Tribunal. The Tribunal took the view that if there was no other evidence available on record apart from the partnership deed dated May 30, 1958, the assessee perhaps could successfully contend that Shanthi Nainar was a partner of the assessee-firm in his individual capacity and that, therefore, even after the formation of the partnership between Shanthi Nainar and his sons under the partnership deed dated May 2, 1960, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three sons. It may be that Shanthi Nainar in fact represented the Hindu undivided family of himself and his three sons in the assessee-firm and his share of the profits from the firm has been taken as the asset of the undivided family and dealt with as such. But the circumstance that Shanthi Nainar was liable to share his profit from the assessee-firm with the other coparceners of his family does not make the coparceners the partners of the assessee-firm. The learned counsel re lies on the decision in Commissioner of Income-tax v. Bagyalakshmi & Co. in support of his submission. In that case, their Lordships of the Supreme Court has pointed out that a contract of partnership has no concern with the obligation of the partners to others in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest in the partnership. As pointed out by the Supreme Court in the same case, Shanthi Nainar might have had a dual position and he had to account for the share of the profits from the assessee-firm to the other coparceners of his family. This, however, cannot affect the rights of a partner's interest. The Tribunal has referred to the following observation of Mudholkar J. in Commissioner of Income-tax v. Chander Bhan Harbhajan Lal as supporting its stand. "These observations are based on the fact that the person admitted as a partner in the firm seeking registration was so admitted as an individual. They cannot apply and were apparently not intended to apply to a kind of a case as the one we have here, that is, where the partner to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, one has only to look to the partnership deed and not to go behind it, that if the partnership deed shows that the partners have entered into a partnership in their individual capacity, and there is nothing to indicate that they have done so as karta of their respective joint Hindu families it is not open to the revenue to go behind the deed and find for the purpose of registration that the partners have joined the partnership as representing their families and to refuse registration. In this case, the registration of the assessee-firm has been refused admittedly by going behind the partnership deed and taking certain facts and circumstances outside the partnership deed. This cannot be done, according to the above decision of the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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