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1961 (4) TMI 132

..... This is a reference under section 66(1) of the Indian Income-tax Act, 1922, at the instance of the applicant, the Baroda City Ice Co. The relevant assessment year is 1953-54, the previous year being the year commencing from August 15, 1951, and ending with August 14, 1952. The applicant firm claims to be a partnership firm constituted under a deed of partnership dated August 20, 1951. The applicant applied for the registration of the firm under the Indian Income-tax Act, 1922. The Income-tax Officer refused to register the firm. The Appellate Assistant Commissioner in appeal directed that the firm be registered. The matter was carried further before the Appellate Tribunal. The Tribunal set aside the order of the Appellate Assistant Commissi .....

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..... Sodagar, carrying on business in the firm name and style of 'Sodagar Ice Factory' at Baroda of the Fourth Part, Ambalal Shankarbhai Patel, one of the partners carrying on business in the firm name and style of 'Messrs. Patel Ice & Cold Storage' of Baroda of the Fifth Part and Burjorji Hormasji, carrying on the business in the name of 'Baroda Ice Factory' at Baroda of the Sixth Part." In the deed of partnership it is recited that each of the aforesaid parties had been carrying on independent business at Baroda. It is further recited that the parties had agreed to carry on business in partnership at Baroda in the firm name and style of "The Baroda Ice Co." on the terms and conditions therein appearin .....

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..... rship. There is a further provision that none of the parties to the agreement would "extend or instal new ice plant or plants in the factory belonging to them either directly or indirectly with a view to increase the actual capacity of the ice plants by extension or installation of ammonia compressor engine or any driving power, brine tank, evaporating coils and condensers or otherwise." It is further provided that none of the parties to the deed of partnership should get interested directly in any new firm, factory or concern in Baroda for manufacture and/or sale of ice. There is a provision for contribution of capital. It is strenuously urged by the learned Advocate-General who appears for the Commissioner of Income-tax that thi .....

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..... es. Clause 5 also provides that the partnership was to sell in local and upcountry markets the ice so purchased at such price as may be1 fixed by the partnership. There is, however, a provision made in clause 5 to the effect that the partnership should pay to each of the parties thereto such moneys as may from time to time be due and payable to each of them as and when the moneys on sale of their respective goods were recovered and received by the partnership. Much has been made of this provision and it is urged that by reason thereof the effect of the provision relating to the purchase of ice by the partnership has been nullified and that there was to be in fact no purchase of any ice by the partnership from the parties mentioned in the de .....

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..... the parties to the agreement and was to sell the ice at such price as the partnership might fix. Section 2(6B) of the Indian Income-tax Act, 1922, provides that the expression "partnership" is to have the same meaning as in the Indian Partnership Act, 1932. "Partnership" is defined in section 4 of the Indian Partnership Act, 1932, as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. In our view the test of partnership has been fully satisfied in the present case and the Baroda City Ice Co. has been constituted a partnership firm under the deed of partnership dated August 20, 1951, and is entitled to be registered as such. There are no other po .....

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