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TMI Blog1989 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee firm had not contributed capital as required under the partnership deed. He relied upon (1) Supreme Court decision in the case of R.C.Mitter & Sons vs. CIT (1959) 36 ITR 1974 (SC) and (2) Calcutta High Court decision in the case of Shankar Tobacco Stores vs. CIT (1970) 77 ITR 884 (Cal). 2. The Commissioner relying upon the Gujarat High Court decision in the case of Achalsinhji Keshrisinh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profit which meant that she had undertaken to bear the losses also. This according to the High Court, was consideration to the other partners. The High Court also held that the fact that no credit was given to the other partners for interest on their investments was not material in view of s. 40(b). therefore, according to the Departmental Representative the Gujarat High Court decision was bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the firm. He also submitted that the Supreme Court decision relied upon by the ITO and by the learned Departmental Representative had no relevance to the case before us because it was regarding the general conditions for registration of the firm. 5. Now, it is not disputed that some of the partners had not contributed capital which was required under the partnership deed. The question before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be granted. That was a case dealing with the situation where partnership was made orally and later on the terms were recorded in writing. The controversy was whether it could be said that the partnership was "constituted under an instrument of partnership". That question, therefore, which remains is regarding the applicability of the Gujarat High Court decision in the case of ACHALSINHJU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but on that account it cannot be said that the partnership is not genuine. In other words a breach of contract does not mean that when the contract was entered into it was not intended to be acted upon. Therefore, the fact that capital is not contributed as agreed upon does not mean that when the partnership deed was entered into it was not intended to be acted upon. We, therefore, hold that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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