9911796707
TMI Blog1983 (3) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 26-2-1970, consisting of two partners, V. Gavararaju and V. Ramamurthy with 40 per cent and 60 per cent shares, respectively. Gavararaju had a son, Krishnakishore. Ramamurthy had two sons, Srinivasarao and Govindakrishna. A fresh instrument of partnership was drawn up on 19-4-1979. By this instrument, with effect from 1-4-1979 two minors, Krishnakishore son of Gavararaju and Srinivasarao son of Ramamurthy, were admitted to the benefits of partnership with 10 per cent and 20 per cent shares, respectively. It was stated that these persons were taken in as partners consequent to partial partitions which took place on 31-3-1979 in the HUFs of Ramamurthy and Gavararaju. The firm applied for registration. The ITO referred to the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals). The learned departmental representative submitted that since partition being partial cannot be recognised, the refusal of registration was in order. The learned counsel for the assessee, on the other hand, stated that the partnership was valid and the provisions of section 171(9) did not operate to render an otherwise valid partnership invalid. 5. We have considered the rival submissions. We now have the judgment of the Supreme Court in the case of Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690. The case dealt with a set of facts where the assessee was not entitled to claim that a partition had taken place under the provisions of section 171 in the absence of physical division of properties. The Supreme Court held reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition ; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly." There is a bar in cases of partial partition after 31-12-1978 to enquire into such partial partition. The further presumption is that the family would continue to be liable to be assessed under the Act as if no parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act which derogates from any other statutory law or personal law, the provision will have to be considered in the light of the relevant branches of law. A contract of partnership has no concern with the obligation of the partner to others in respect of their shares of profit in the partnership. It only regulates the rights and liabilities of the partners. A partner may be the karta of a joint Hindu family ; he may be a trustee ; he may enter into a sub-partnership with others ; he may, under an agreement, express or implied, be the representative of a group of persons ; he may be a benamidar for another. In all such cases he occupies a dual position, qua the partnership, he functions in his personal capacity ; qua the third parties, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership vests : Commissioner of Income-tax v. A. Abdul Rahim Co. [1965] 55 ITR 651 ; Commissioner of Income-tax v. Bagyalakshmi Co. [1965] 55 ITR 660." [Emphasis supplied] As stated by the Supreme Court, the ITO is not concerned to determine in whom the beneficial interest in the share in the partnership vests. Therefore, whether the partnership is recognised or not for the purposes of the Act, as long as there is a partial partition in Hindu law, it cannot be held that there was any make-believe on the part of the parties in holding out that the minors received certain amounts consequent to the partial partition. The ITO himself has considered the firm to be genuine, but he took the view that in view of the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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