TMI Blog1977 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Nagaland Liquor Stores, was reconstituted on January 9, 1969, by another partnership deed which has been printed as annexure D, pages 19-21 of the printed book. In this partnership, in addition to the above said three persons, a fourth partner, Zevalhou Angami, was inducted for the first time. Subsequently, there were four persons (partners), instead of three, with shares as follows : 50 per cent. for the first partner and 16.66 per cent. for each of the other three partners. Totalling up these shares one would find a deficiency of 0.02 per cent. shares. This was held to be of no consequence by the ITO (vide annexure A dated June 23, 1973, page 6 of the printed book). This point is not before us, because this is not one of the points which arises out of the reference. S. 184 and s. 185 of the I. T. Act, 1961 (Act 43 of 196) (hereinafter called " the Act "), deal with applications for registration of partnership firm ; the applications have to be made to the ITO under s. 184 of the Act ; r. 22-25 of the I. T. Rules of 1962, have been framed, vis-a-vis, the manner of making such applications. That these requirements were duly complied with has riot been disputed. As per s. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of carrying on storing, bottling, blending and selling liquor, which was to continue for 20 years. The business of the part nership was to be carried on at Dimapur, where it is said to be carried on at the present moment. The partnership deed also authorised that business could be conducted at such other places in Nagaland as may be mutually agreed upon. The entire capital of Rs. 10,000 was contributed by the first party, Abin Inderjit Singh ; if any further sum was required for the business, the same was to be advanced to the partnership only by him and would be disclosed in the books of the partnership. Proper and regular accounts of the affairs and transactions of the partnership were to be maintained and kept at the business place of the partnership. The first party was to be the managing partner. The annual balance-sheet of account was to be prepared under the supervision of the managing partner and, thereafter, they were to be confirmed and signed by each of the other three partners, if there was any defect or irregularity it could be pointed out by the other partners and the managing partner had to take steps to rectify it within three months thereafter. One of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Judicial Member of the Appellate Tribunal, shows that a number of decisions were referred to in para. 6 as having been referred to by the assessee's counsel, none of them has been explained in the order. We have, as we shall presently indicate, found no need to go into any decided case because this case appears to be fairly simple and could, therefore, permit the same being disposed of on legal principles which may be regarded as well established. There is an observation in the order, para. 9, that cl. 9 " is the villain of the piece ". We are unable to find any " villain " here or elsewhere in the deed. Without going into any reasoning of the Appellate Tribunal, which we find is substantially one of following what the CIT had said, we may set out the principles pertaining to partnership generally and analyse the relevant portions of the partnership deed in question. As defined under the Indian Partnership Act, 1932, a partnership is a relation between partners who have agreed to share the profit of the business carried on by all or any of them acting for all. This is what is known as the principles of mutual agency. The four partners in this case did agree to share the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship or the other partners. There has been same obvious confusion created by the use in cl. 9 of the words " the same rights and privileges " as the managing partner when K. Singh was working in his place. It will be seen from cl. 8 of the partnership deed itself that the managing partner in addition to the share of profit, " would also be entitled to free board, accommodation and transport ". The reference to the same " rights and privileges " in cl. 9 was obviously to the above said privileges and rights referred to in cl. 8 as extracted above. It is important that K. Singh was not to have the duties of a partner. It is also important that for the work lie did no separate remuneration had been provided. By reason of the younger brother working in the place of the managing partner (No. 1 party to the partnership deed) the share of the profit of the managing partner would not be increased or diminished ; his share of profit would be same whether he worked himself or allowed his brother, K. Singh, to " work " for him during his absence. We are surprised that not only the CIT but also the learned Appellate Tribunal made a reference to his brother, K. Singh, not having worke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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