TMI Blog1957 (2) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year of account is S.Y. 2005 which corresponds to the period 2nd November, 1948, to 21st October, 1949. The application for registration was made on the 18th August, 1951, and that application was supported by a partnership agreement dated 26th October, 1950. In that partnership deed four partners were shown, viz., Messrs. Chandulal Dayalal Co., Messrs. Shantilal Vrajlal Co., Patel Nanalal, and Desai Keshavlal, and the share of each of these partners was shown as 4 annas. The partnership deed also recited that this partnership was continued in S.Y. 2006 but the share of the partners was altered and the alteration was that Chandulal Dayalal was given a share of 6 annas, Messrs. Shantilal Vrajlal Co. was given 4 annas, Nanalal Mohanl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st partnership deed the partners shown were two individuals Nanalal and Keshavlal and two firms Chandulal Dayalal and Shantilal Vrajlal Co., and on the strength of a Supreme Court decision reported in Dulichand Laxminarayan v. Commissioner of Income-tax [1956] 29 ITR 535 Mr. Joshi argues that such a partnership cannot be registered under the Indian Income-tax Act. It is perfectly true that the Supreme Court has pointed out that a firm is not a person and that a firm cannot enter into a partnership with an individual because the Partnership Act requires that the contract, of partnership must be constituted by persons deciding to carry on a partnership. Therefore, to the extent that this partnership deed set out as partners two firms and tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corrects the infirmity which attached to the first partnership deed. What the first partnership deed set out was the correct position, viz., that the partners of the firm were Nanalal, Keshavlal, Messrs. Chandulal Dayalal Co. and Messrs. Shantilal Vrajlal Co. From a commercial point of view the two partners were Messrs. Chandulal Dayalal Co. and Messrs. Shantilal Vrajlal Co. Businessmen still look upon firms as legal persons, but in view of the Supreme Court decision this deed suffered from this infirmity that it did not set out the constituent members of these two firms who were the real partners and not the firms, and this infirmity was removed by the second partnership deed which set out the constituent members of the two firms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or registration is not correct. Now, technically Mr. Joshi is right that in the books of account no separate accounts have been opened of the constituent partners of these two firms. But in our opinion it is a pure technicality. On the facts contained in the second partnership deed it is clear that although in the books of account the profits are allocated to the two firms, the profits belong to the constituent partners of those two firms, and it is also clear how those profits are to be divided between the constituent partners of Messrs. Chandulal Dayalal and Messrs. Shantilal Vrajlal Co. Therefore, if the books of account show what share of profit was allocated to the firm of Messrs. Chandulal Dayalal and to the firm of Messrs. Shantila ..... X X X X Extracts X X X X X X X X Extracts X X X X
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