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TMI Blog1984 (2) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from June 6, 1968. It had 6 partners. Their names and shares in the profit and loss of the business were as under : 1. Shri Brij Lal 10% 2. Shri Chhajju Mal S/o Sh. Munshi Lal 20% 3. Shri Om Prakash S/o Sh. Desh Raj 25% 4. Shri Suresh Kumar S/o Sh. Chhajju Mal 10% 5. Shri Prem Kumar 20% 6. Shri Om Prakash S/o Sh. Hari Chand 15% For the assessment year 1970-71 (the year under consideration) of which the previous year was June 6, 1968, to June 30, 1969, the firm earned profit and in its books divided the same as per the terms of the partnership deed among all the 6 partners. In the second year, the firm sustained heavy losses. This led, it appears, Chhajju Mal to file a suit on June 5, 1970, for dissolution of the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of compromise, i.e., July 30, 1970, rather than the fact as existed on June 30, 1969, when the profits of the firm were duly divided among all the partners where by Chhajju Mal and Suresh Kumar got Rs. 6,277 and Rs. 3,139 respectively. The AAC found that the credit balances in the accounts of these two partners on June 30, 1969, were Rs. 43,778 and Rs. 49,540 respectively. On the date of the compromise, however, balances in these two accounts came down to Rs. 22,801 and Rs. 45,200, which showed that the earlier credit balances had been acted upon by the two partners either by withdrawing the amounts from their accounts in the later period or by the loss having been debited to their accounts after June 30, 1969. He held that the firm was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 184 were met. At this stage, it will, therefore, be appropriate to refer to the deed of compromise dated July 30, 1970. Paragraph 2 of this deed recited that Chhajju Mal and Suresh Kumar retired from the partnership with effect from July 30, ,1970, leaving the reconstituted firm comprising of the remaining 4 partners to continue the business of the partnership. Clause 3 stated that the amount invested by these two outgoing partners in the business of the partnership as on July 30, 1970, was: Chhajju Mal Rs. 22,801 ; and Suresh Kumar Rs. 45,200. As per clause 4 both of these outgoing partners received either cash or promissory notes covering the above two amounts and granted receipts for having received these payments. Clause 5 was as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Act. Since, in the instant case, the partnership was at will, a partner had also the option to go in for dissolution of the firm. The partners decided, however, to retire two partners and the deed of compromise recorded the terms of retirement of the two partners as from July 30, 1970. Though cl. 5 loosely used the words that the outgoing partners "will neither be entitled to any profit earned by the partnership so far nor will they be liable for any loss incurred by the partnership ", as per cl. 3 both the outgoing partners accepted the amounts standing to their credit as on July 30, 1970. The Tribunal found that the profits of the firm for the year under consideration had been divided as per the terms of instrument in the books of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike. We do not find these decisions to be relevant, and it is not necessary to refer to them. The requirements of ss. 184 and 185 of the Act and rule 22 of the I.T. Rules, which deal with registration of a firm, are quite simple. The application for registration of a new firm is required to be made in Form No. II as prescribed by rule 22. It is to be accompanied by the partnership deed which must specify the individual shares of the partners. The application is to be made to the ITO concerned and is required to be signed by all the partners personally. An exception is provided in the case of partner who is absent from India or is a lunatic or an idiot. The application is required to be made before the end of the previous year unless suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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