TMI Blog1966 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... being partitioned are adjusted with reference to the properties subject to partition as a whole. In the case before us, therefore, the deed of relinquishment was valid at least in respect of movable properties, and the partnership seeking registration, thus, became owner of all the movable assets of the partnership in addition to having contributed a sum of ₹ 50,000 as capital investment in it. The Kamla Town Trust and Jhabbarmal Saraf constituted the partnership under a deed of partnership, which was properly executed, and, in these circumstances, the partnership that came into existence was clearly valid in law. There is, therefore, no force in this appeal - C.A. 127 OF 1966 - - - Dated:- 7-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by BHARGAVA J.-----This appeal arises out of proceedings for registration of the firm, Juggilal Kamalapat, Calcutta, under section 26A of the Income-tax Act (hereinafter referred to as the Act ) for the assessment year 1943-44. Prior to this assessment year, the three Singhania brothers, Sir Padampat Singhania, Kamlapat Singhania and Lakshmipat Singhania were carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust. The reason given by the Income-tax Officer for not accepting the registration need not be mentioned here, because that reason was not accepted by the Tribunal and was not urged before the High Court or before this court on behalf of the Commissioner. On appeal, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer for reasons given by him which were different from those given by the Income-tax Officer. Those reasons are again immaterial, because those reasons were not accepted by the Tribunal or the High Court and have not been relied upon before us. The Income-tax Appellate Tribunal upheld the order rejecting the application for registration under section 26A on the main ground that the relinquishment deed dated 2nd December, 1942, being an unregistered document, could not legally transfer rights and title to the immovables owned by the firm in favour of the Kamla Town Trust, and that the transfer of the immovable properties being thus legally ineffective and they being not separable from the other business assets, the entire business of the firm was not legally transferred in favour of the Kamla Town Trust. Two other reasons were also given th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s answer returned by the High Court on certificate under section 66A(2) of the Act. It appears from the judgment delivered by the High Court that when the reference came up before it, an argument was raised on behalf of the Commissioner of Income-tax that the Tribunal had recorded a finding of fact that the firm seeking registration, consisting of the Kamla Town Trust and Jhabbarmal Saraf was not a genuine firm and that this should be the answer returned by the High Court to the Tribunal. It was in view of this point raised before the High Court that the High Court considered it necessary to remand the case twice to the Tribunal to ask for supplementary statements of the case under section 66(4) of the Act. At the final hearing, however, the High Court held that it could not be accepted that the Tribunal had, as a question of fact, recorded the finding that this firm seeking registration was not genuine and had never come into existence, and thereupon proceeded to deal with the question referred as a question of law so as to determine whether the firm had come into existence as a legally valid firm. In this appeal before us, again, it was urged by Mr. S. T. Desai on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The existence in law of a firm, which does not exist in fact, could not possibly be found by the High Court on the question referred. Consequently, we must reject the submission made on behalf of the Commissioner that, in this case, the High Court should have gone into the question of existence of the respondent-firm as a question of fact ; and in this appeal also, we must proceed on the basis that the respondent-firm did in fact come into existence, and that all that the High Court was called upon to decide was whether it also came into existence in law. It appears to us that, in this case, the submissions that were made on behalf of the Commissioner before the High Court and which have been made before us have ignored the effect of the important relevant documents and have unnecessarily placed too much reliance on the deed of relinquishment. The Tribunal found that a Kamla Town Trust had been constituted of which the three Singhania Brothers were the trustees. The Tribunal also found that a deed of partnership was executed so as to constitute the firm, Juggilal Kamalapat, consisting of two partners, the Kamla Town Trust, represented by the three trustees, and Jhabbarmal Sara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges. On this basis, the ultimate decision was that a deed, evidencing the transfer of an interest of a partner in partnership assets, does not require registration, even though the partnership assets are comprised of movable as well as immovable property. A Full Bench of the Lahore High Court in Ajudhia Pershad Ram Pershad v. Sham Sundar held that the interest in a partnership of a partner is to be regarded as movable property when it is sought to be dealt with under Order 21, rule 49, of the Civil Procedure Code, notwithstanding that at the time when it is charged or sold, the partnership assets include immovable property. The deed of relinquishment, in this case, was in respect of the individual interest of the three Singhania Brothers in the assets of the partnership firm in favour of the Kamla Town Trust, and, consequently, did not require registration, even though the assets of the partnership firm included immovable property, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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