TMI Blog1978 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ari 62,500 It is seen from the above capital contribution that the shares of capital contribution work out as 25%, 37.5%, 12.5%, 12.5% and 12.5%. An application for registration was made on March 31, 1968, in respect of the assessment year 1967-68. The partnership deed itself was executed on 1st July 1967. The partnership deed was signed by the guardian on behalf of the minor along with other partners. The application for registration was signed by the major partners. The partnership deed provided that the net profits ascertained shall be divided between the partners in proportion to their shares in the capital. The deed did not specify the shares of the partners in the losses. The ITO rejected the application among other grounds stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denced by an instrument and the individual shares of the partners are specified in that instrument. The question whether in the instrument itself there should be a specification of the share of losses also even when there is a specification of the sharing of profits, came up for consideration in a number of decisions. The Kerala High Court in both the decisions, CIT v. Ithappiri George [1973] 88 ITR 332 and United Hardwares v. CIT [1974] 96 ITR 348, to which one of us was a party, took the view that, on the clear language provided in the Act, the sharing of the losses also would have to be specifically provided and there is no scope for discerning any principle from the supposed intention of the parties. In the words of the learned judges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. It was argued that the sharing of losses should be deemed to be in the ratio of 40% and 35% which is the ratio in which they have to share the profits. It is with reference to these facts it was held that the question was not as to whether they could discern some principle or other for determining in what manner the losses should be borne by the two partners who were to take 40% and 35% of the profits but whether the partnership deed has specified that proportion. A similar view has been taken by the Gujarat High Court also in Thacker Co. v. CIT [1966] 61 ITR 540. The question came up for consideration before the Supreme Court also in the decision in Mandyala Govindu Co. v. CIT [1976] 102 ITR 1. While they referred to the conflict ..... X X X X Extracts X X X X X X X X Extracts X X X X
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