9911796707
TMI Blog2002 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... olved in all the four references, they are disposed of by this common judgment. At the instance of the Revenue, the following question of law is referred to for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the finding of the Appellate Tribunal that no sub-partnership was formed between the assessee and his wife, Smt. Suryakanta Natwarlal, and the share of the assessee's wife could not be included in the income of the assessee, is correct in law and sustainable from the material on record?" Although there is slight variation in framing of the question for the subsequent years, the controversy raised is same in all the four assessment years and, hence, considering the question raised and referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income as per his or her share on this partition...." (The above quotation is from the partition deed itself. The partition deed also provides that Mrs. Suryakanta "shall have prior change over his share of income in the firm of N. Desai and Co. to the extent indicated hereinabove." On July 1, 1971, a new partnership deed was executed so that in the firm, N. Desai and Co., the assessee had now 50 per cent. share and his son, Pradip, had 25 per cent. share therein. The Income-tax Officer held that with regard to the 50 per cent. share of the assessee in the said firm, there came into existence a sub-partnership between the assessee and his wife and, therefore, added the share income of the wife to the income of the assessee. He relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, was to share equally the profits from that firm. Thus, in that case, there was a separate agreement with his wife and son and there was consideration also for that agreement. It was for these reasons that the court held that there was a sub-partnership in that case. Therefore, the ratio of that case is that there has to be a clear agreement satisfying all the requirements of partnership. In the present case, that is not so. The Revenue's case is based merely on an inference. None of the requirements of partnership stated above is satisfied. Therefore, we hold that there is no sub-partnership in the case and we confirm the order of the Commissioner (Appeals)". Being aggrieved by the aforesaid decision of the Tribunal, the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm to himself and as representative of his wife and son. In consideration of the use of these amounts, the assessee agreed to share equally with his wife and son the profits coming to his share from the firm, subject, however, to the obligation of making to each of them a minimum payment of Rs. 1,000 per annum. On these facts, the question that arose before the court was whether the wife and minor son became partners in the firm, or, in the alternative, a sub-partnership came into existence between them and the assessee. On these facts, this court has held that (i) the wife and minor son of the assessee did not become partners in the firm; (ii) however, there was a sub-partnership between the assessee, his wife and their son because all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents including the judgment of this court in Mahendrasingh Mohansingh's case [1980] 123 ITR 938; CIT v. Ram Narain [1980] 126 ITR 267 (P&H) and CIT v. Pabbati Shankaraiah [1984] 145 ITR 702 (All). While distinguishing the judgment of this court on the facts and agreeing to its earlier decision in Ram Narain's case [1980] 126 ITR 267, the Punjab and Haryana High Court has held that there was a clause creating an overriding obligation on the karta to make over the income of the other members of the family with whom a partial partition had been effected and it was held that the share of each such member from the inception accrued to them, creating thereby a superior right in their favour and was, thus, not assessable in the hands of the father ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, they are dividing it between themselves. It was also found by the Tribunal that the assessee was not carrying on the business for himself and his wife and that the assessee was merely a partner in the firm N. Desai and Co. having a right to get 50 per cent. share of the profits. That 50 per cent. share was subject to the charge of his wife to the extent of 1/2 of it. That was merely a division of the profit and not authority to carry on business on behalf of the wife. Therefore, the requirement of partnership as laid down by this court in Mahendrasingh Mohansingh's case [1980] 123 ITR 938 is not satisfied in present case. It was further observed that the intention was to secure to the wife her one-third share of the profits from the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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