TMI Blog1976 (12) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to both are almost identical, as the Tribunal observes in its statement of case. The two firms are: M/s. Ramkumar Co., a firm of Delhi, and M/s. Birla Cotton Mills Cloth Shop. M/s. Ramkumar Co. was at all material times governed by a deed dated January 20, 1954, and there were 12 partners in the firm who were all members of either the Jalan family or the Kejriwal family, although they did not represent these families. On December 28, 1956, which date falls in the accounting year, the firm, Ramkumar Co., constituted by the deed dated January 20,1954, was dissolved and a new firm formed on the next day, i.e., December 29, 1956. By deed of dissolution, 8 of the 12 partners, including the three assessees, retired from the partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners who retired from each of the two firms, adopted the device of substituting their minor sons and wife in the firm in their places in order to escape what the Income-tax Officer called " the proper incidence of taxation ". He laid emphasis on the fact that the two minor sons and Gita Devi did not invest any capital, nor did they contribute their labour to the working of the firm. It was also noticed that while the Jalan group as a whole had 11 annas and 3 pies in the old firm, that group as reshuffled had a share of 10 annas in the new firm. Considering these facts, it was held by the Income-tax Officer that factually the retiring partners transferred their shares of profit to their minor sons or wife. According to him, by reason of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is unnecessary to set out in this judgment the provisions of section 16(3)(a), but when they are perused properly, it is perceived that none of the four clauses of section 16(3)(a) can be brought into use by the Department. As the assessees had ceased to be partners, the case clearly falls outside clauses (i) and (ii). Further, there is no warrant for applying clauses (iii) and (iv) in view of the clear finding by the Tribunal that there were no assets of the assessees transferred to the two minor sons or to the wife. In view of this clear finding, it must be held that the conclusion of the Tribunal is correct and unexceptionable. In the result, the question referred to us is answered in the negative and in favour of the assessees. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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