TMI Blog1993 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm, Messrs. Ramchandra Udhavdass, was constituted by a deed dated February 5, 1972, consisting of Ramchandra, Udhavdass and Gurnamal sharing the profits and losses at 40 per cent., 35 per cent. and 25 per cent., respectively. The registration for the assessment year 1973-74 was granted by the Income-tax Officer. The firm follows the calendar year as its previous year. Ramchandra expired on July 24, 1973, and, therefore, in accordance with the provisions of clause 7 of the partnership deed dated February 5, 1972, Smt. Sakhi Bai was admitted as a partner with effect from July 25, 1973, in place of Ramchandra. The new deed of partnership was executed on August 21, 1973. The Income-tax Officer granted registration to the firm under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer found that there is no account in the name of Sakhi Bai in the books of account and the entire amount of profit has been credited in the account of Ramchandra Sakhi Bai. According to the Income-tax Officer, the entire profit could not have been credited to the account of Ramchandra since she was not a partner for the whole of the year. A copy of the accounts as existing in the books of account for the assessment years 1973-74, 1974-75, 1975-76 and 1976-77 was also submitted. Since the profit for the assessment year 1974-75 was not divided and credited to the account of Sakhi Bai, the Income-tax Officer was of the view that the profit was not divided amongst the partners in accordance with the share specified in the deed of partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. On facts the dispute has arisen on account of not crediting the profit for the period from July 25, 1973, to December 31, 1973, in the account of Smt. Sakhi Bai. Clause 7 of the partnership deed dated February 5, 1972, reads as under : " Clause 7 of the deed dated February 5, 1972: That the relationship between the partners will be governed by the Indian Partnership Act in force save and otherwise that on death or demise the partnership shall not be dissolved but shall continue to be carried on by the surviving partners and the legal representatives of the deceased." The firm was granted registration for the assessment years 1973-74 and 1975-76. It was on the basis of the above clause that the books of account were not closed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entitled to the share in the profit from January 1, 1973, to July 24, 1973, and Sakhi Bai was entitled to the profit from July 25, 1973, to December 31, 1973. Instead of distributing the profit separately the amount was credited in one account only, may be because only one set of books of account was maintained. The finding which has been recorded by the Tribunal that the profit due to Sakhi Bai was credited to a wrong account would not disentitle the firm from registration. Even by subsequent events it was found that the profit which should have been distributed in accordance with the deed of partnership shall be deemed to have been distributed and it was only the balance amount standing in the account of Ramchandra which was distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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