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1961 (4) TMI 132

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..... 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 Commissioner. The question that arises for our consideration is the following : "Whether, on the facts and in the circumstances of the case, the Income-tax Officer was right in refusing to grant registration to the assessee under section 26A of the Income-tax Act ?" The point in dispute between the applicant and the respondent is whether a partnership has been constituted under the deed of partnership bearing date August 20, 1951. It is .....

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..... ship 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 appearing. Clauses 1, 5 and 9 of the deed of partnership provide as under ; "1. The partnership shall be that of sale of ice that will be manufactured by each of the parties hereto in their respective factories in Baroda. 5. The partnership shall purchase ice from each of the parties hereto in the first instance on credit and each of the parties hereto shall sell and supply whenever required to the partnership ice on credit at such price as .....

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..... arties 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 this arrangement, though it appears in a document styled a deed of partnership, is in reality an arrangement whereunder the ice manufactured by the six factories mentioned in the deed is to be pooled together for the purpose of sale. Strong reliance has been placed on clause 1 referred to above. It is no doubt true that under clause 1 the partnership was to be for the sale of ice. The ice to be sold was the ice that was to be manufactured by .....

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..... ed 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 deed. It is urged that the so-called price of the ice puported to be sold to the partnership was to be paid "as and when the moneys on the sale of their respective goods are recovered and received by the partnership". It is urged that these words indicate that it was only when moneys were recovered and realised in respect of the goods of the various parties to the agreement that the partnership came under an obligation to pay the .....

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..... d 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 points urged before us. The question as framed needs slight modification. We would reframe the question as follows : "Whether, oil the facts and in the circumstances of the case, the Baroda City Ice Co. was entitled to be registered as a firm under the provisions of section 26A of the Indian Income-tax Act ?" Our answer to the question is in the affirmative. The Commissioner will pay to the assessee the costs of the reference. - I .....

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