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TMI Blog1989 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... hip deed and only 4 partners signed the partnership deed. Nobody on behalf of the Deity signed the partnership deed. The Income-tax Officer held that the provisions of sec. 184(3) of the Income-tax Act were contravened. The assessee by its letter dt. 13-2-85 sought to explain that the partnership was only among the 4 partners that it was decided by all the partners of the firm that 1% of the profits shall be allocated in the name of Lord Venkateswara which amount can be presented to the Tirupathi Devasthanam that under the provisions of Partnership Act, the deed was a valid one and therefore registration can be granted. However, the Income-tax Officer felt that since nobody signed on behalf of the Deity who figured as 5th partner and since no valid explanation was offered on behalf of the assessee to make up this deficiency, the Income-tax Officer felt that the assessee contravened the provisions of section 184(3) and not entitled for grant of registration and he sought to obtain support for his refusal to grant of registration from two case laws in Manohar Das Kedar Nath v. CIT [1950] 18 ITR 914 (All.), CIT v. Tapang Light Foundry & Co. [1983] 147 ITR 581/13 Taxman 127 (Cal.). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partner Lord Venkateswara, Tirupathi did not sign the partnership deed. Form No. 11 which is the form to be signed by all the partners while applying for registration of the firm, was also signed only by 4 partners and nobody signed representing Sri Lord Venkateswara, the 5th partner. The Income-tax Officer in those circumstances is quite correct in holding that the provisions of sec. 184(3) are contravened and hence the registration should be refused to the assessee-firm. The learned Departmental Representative further contended that if I am to accept that Sri Lord Venkateswara should be considered as partner of the assessee-firm then the repercussion would be too serious - Lord Venkateswara would be made liable for all the debts and liabilities of the firm and the assets of the Lord would be open to be proceeded against for the debts and liabilities of the firm. Under the provisions of the Partnership Act the liability of the partners is joint and several in view of the categorical provisions of sec. 25 of the Partnership Act which is as follows : " Liability of a partner for acts of the firm --- Every partner is liable, jointly with all other partners and also severally for all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the facts of the present case Lord Venkateswara who is a juristic person and who can be represented validly only by the T.T. Devasthanam, which is a statutory body was not represented by anybody in the impugned partnership deed, and hence, he was not validly represented by anybody; (iv) since nobody represented Lord Venkateswara, the impugned partnership agreement is much more illegal than the agreement considered by the Karnataka High Court : and (v) Lord Venkateswara cannot be made liable to losses to any extent much more so when he was not validly represented. 6. I have considered these arguments and also gone through the relevant files of the case and orders of the lower authorities. I am of the view that the impugned orders passed by the Appellate Asst. Commissioner are liable to be set aside. I am also of the view that Bhagwanchand S. Jain & Co.'s case which is the sheet anchor of the assessee's argument, is distinguishable and the points of distinction made out by the learned Departmental Representative which were listed above, in my orders, are all to be accepted. I have gone through minutely into the Karnataka decision. In that case initial registration was granted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a juristic person and would hold property and be in receipt of income and can also sue and be sued in a Court of Law. The Supreme Court ultimately held that the income derived from the property belonging to the Deity can be assessed to income-tax through its shebait or Manager. At p. 589 of the reported decision the Calcutta High Court held as follows :----- " Under s. 26A of the Indian I.T. Act, 1922 and rules 3 and 4 of the Rules framed under the Act, an Income-tax Officer was only empowered to register the partnership which was specified in the instrument of partnership which had been put forward. Therefore, where a mutawalli of a wakf or infants were partners in the firm which was sought to be registered, the partnership could not be treated as one between the remaining partners and registered as such, under s. 26A, nor could be wakf or infant partners be treated as partners in a loose sense in such cases and the partnership be considered as one that could be registered under s. 26A, where an application was made for registration of a firm, the Income-tax Officer had power to determine whether the partnership which was alleged to exist really existed and to refuse registration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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