9911796707
TMI Blog1994 (2) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Duddu Hanumantha Rao having the profit sharing ratios shown against each of their names as under : (1) Sri Duddu Subramanyam .. 35% (2) Sri Gadamsetty Subba Rao .. 35% (3) Sri Gadamsetty Satyanarayana .. 14% (4) Sri Duddu Hanumantha Rao .. 16% The latter firm filed Form Nos. 11 and 11A on 2-9-1983 along with the original partnership deed dated 2-7-1983 and also along with a true copy thereof seeking registration of their firm for assessment year 1984-85. According to the assessee, the previous year of the assessee-firm is the year ending with 31-3-1984. In the application for registration it is stated that Sri Gadamsetty Satyanarayana and Shri Duddu Hanumantha Rao have been admitted to the partnership with effect from 1-4-1983 and, therefore, the new partnership carried on its business from 1-4-1983 to 31-3-1984 and since there are four partners in the partnership firm which was reconstituted, the assessee is entitled to initial registration under section 185(1)(b) was in short the contention of the assessee. The contention of the revenue on the other hand, was that the reconstituted partnership under the partnership deed dated 2-7-1983 comes into effect only prospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted as partners of the firm from 1-4-1983 and they alongwith the two old partners entered into an oral partnership which was subsequently reduced into writing in the partnership deed dated 2-7-1983 filed before the Income-tax Officer together with the application for registration for assessment year 1984-85. In the partnership deed dated 2-7-1983, by mistake it was stated that Shri Katta Ramakoteswara Rao retired from the firm with retrospective effect from 1-4-1983 and the reconstituted partnership shall be deemed to have commenced business from 1-4-1983. In fact Shri Katta Ramakoteswara Rao retired from 1-4-1983 and the two other partners are taken as new partners into the firm on 1-4-1983 itself. Thus the position would be made very clear if a copy of the retirement deed dated 10-7-1983 entered into by Shri Katta Ramakoteswara Rao is perused which is filed along with the petition. The retirement deed is in Telugu and it is furnished at pages 7 to 9 of the paper book. It is executed on non-judicial stamp papers of Rs. 5 worth. It is executed on 10-7-1983. It is stated in the preamble that Shri Katta Ramakoteswara Rao, Sri Duddu Subramanyam and Shri Gadamsetty Subba Rao togethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect as and from 1-4-1983 mentioned in para 3 of the partnership deed dated 2-7-1983 are also typographical mistakes. There is no question of the business deemed to be continuing with effect from 1-4-1983. In fact the business of the reconstituted firm began from 1-4-1983. 5. Shri B. Rama Rao, the learned Departmental Representative, on the other hand, contended that the argument that there are tyographical mistakes crept into the partnership deed dated 2-7-1983 cannot be believed especially when there is no room for such mistakes being committed at two different places in the partnership deed -- one is with regard to the date of retirement and another is with regard to commencement of business of the reconstituted firm which are crucial places. The argument of the learned counsels for the assessee cannot pass muster especially in view of the fact that neither the retirement deed nor the reconstituted partnership deed were executed on 1-4-1983 itself. They were in fact executed on 10-7-1983 and 2-7-1983 respectively. This would show that both retirement deed dated 10-7-1983 and reconstituted partnership deed dated 2-7-1983 are subsequently cooked up documents. If really Shri Kat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration for assessment year 1984-85. It is strongly contended by the counsels for the assessee that the Income-tax Officer granted registration to the same assessee-firm for assessment year 1985-86 which is the immediately succeeding assessment year to the one under consideration on the ground that the assessee-firm was genuine. In fact the order granting registration to the assessee-firm for 1985-86 was filed at page 8 of the paper compilation. Shri B. Rama Rao, the learned Departmental Representative, contended that simply because the assessee-firm granted registration for 1985-86 on the ground that it was found to be a genuine firm, it should not automatically mean that the said firm conducted business through the accounting year, namely from 1-4-1982 to 31-3-1983. The assessment as well as the order for registration is separate and distinct for each of the assessment years and, therefore, the order granting registration for 1985-86 especially when there are a number of suspicious circumstances which would justify a finding that it is quite unlikely that such business would not have been carried on by the assessee-firm from 1-4-1982 to 31-3-1983. 6. After having heard both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neffective. Income-tax is an incidence on the profits of each year and the question, therefore, in each year, is whose are those profits and from whose business do they arise ? Such ownership having been determined during the year, the same cannot be evaded by a later deed. The past cannot be altered by what the parties choose to say later on. Where on the other hand, the parties have in point of fact been carrying on as partners even earlier giving rise to partnership accounts and partnership liabilities and the deed is executed later to record the partnership pre-existing from such earlier date, then it would be as if there was a partnership from the earlier date. However, if the object of the parties from the commencement was that there was not to be a partnership except such as to be regulated by a deed of partnership to be executed, and such deed does not materialise, there would be no partnership in law though the persons might have carried on the business on the footing of partners. Likewise if a firm is dissolved on a particular day, such dissolution cannot be dated back to an anterior period by means of a mere rectial in the deed." Having regard to the legal position sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the assessment year 1959-60. On 29th August, 1960, a new partnership deed was executed which stated that one of the partners had relinquished her share in the firm and her son had become a partner in her place and 'this agreement of partnership has already been distinctly understood between the parties and has been acted upon by the parties with effect from the 1st day of January, 1959'. The Tribunal held that the statement that there had been an oral agreement dated 1st January, 1959, was of no consequence and the old firm was entitled to renewal of registration for the assessment year 1960- 61. On reference : Held, that the decision of the Tribunal that the deed executed in 1960 did not affect the rights of partners in the calendar year 1959 was not a finding of fact. It was a legal conclusion arrived at by the Tribunal which was not correct." The new firm on an oral agreement was not entitled to registration by way of renewal or otherwise for the assessment year 1960-61. The old firm having ceased to exist on and from 1st January, 1959 was not entitled to registration." The decision of the Calcutta High Court definitely come to support the arguments of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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