TMI Blog1996 (7) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... onsolidated and a common order is being passed for the sake of convenience. 3. The facts of the case are that the assessee-firm was originally constituted as a partnership firm on 7-10-1977. Thereafter, on 15-1-1982, one of the partners, viz., Shri Rameswar Agarwal died. Already one of his son, viz., Shri Arun Kumar Agarwal was a partner in the assessee-firm as individual. On death of Rameswar Agarwal, the partnership was reconstituted by a deed dated 2-8-1982 in accordance with which the son of the deceased, viz., Arun Kumar Agarwal also joined as a partner in the capacity of karta of the HUF represented by him. One of the issues raised by the Assessing Officer for cancellation of the registration in each of the years is this issue relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nadequacy of profits of the firm. It was furthermore provided that the balance of net profits shall be divided equally amongst the first four partners. Losses of the firm were also provided to be being borne only by the first four partners in equal shares. It was also provided in the Partnership Deed that the fifth partner Shri Laxmana Rao shall be a dormant partner and that the other partners would only work and attend to the business of the firm. The partnership was also provided to be one at will. At clause 15 of the Partnership Deed, it was provided as below : "15. The fifth partner agreed that he or on his death, his legal representatives shall not be entitled to claim dissolution and rendition of accounts of the partnership but ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rao was entitled to a fixed rate of remuneration and not the profits of the firm and furthermore that he was not subjected to the losses of the firm, if any. In the appellate order, the DCIT(A) for some years and the CIT(A) for some other years, considered the issue at depth and allowed the appeal of the assessee in view of the decision of the Karnataka High Court in the case of Janatha Textiles in [ITRC Nos. 65 and 66 of 1983, dated 12-8-1988]. 7. The learned DR has relied on the decision of the Andhra Pradesh High Court in the case of CIT v. B. Pandaiah Co. [1983] 143 ITR 464/14 Taxman 499 in which it has been held that a partnership firm formed by way of an adult being admitted to the benefits of partnership is not valid in the eye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covenant was that he was to keep the land leased to the assessee-firm for a period of 20 years and thereafter for another period of 20 years. The learned DR has tried to infer from the above clause in the Partnership Deed that there was no intention of the partners to bind themselves as partners in the firm. The learned DR has furthermore relied on the judgment of the Supreme Court in the case of Ram Laxman Sugar Mills v. CIT [1967] 66 ITR 613. The facts of that particular case, however, related to the question of representation of the family in the partnership firm on total partition of the family. Hence, the facts of the present case cannot be considered to be on par with those of that particular case. 9. The teamed Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng whether the Tribunal can entertain new points, as raised by the Departmental Representative at the stage of the hearing of the appeal before it, the entire issue can be decided in favour of the assessee on the basis of the facts of the case and the binding decision of the Karnataka High Court in the case of Janatha Textiles. In that particular case also, in addition to the four original partners sharing both profits and losses, two other partners were introduced who were to share profits of the firm at the rate of 10 each or Rs. 12,000 whichever is higher and on the other hand, they were not supposed to share in the losses of the firm, if any. The Karnataka High Court, after going through the facts of the case and taking into considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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