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TMI Blog1981 (4) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... qually by all the partners and that therefore there was no justification for refusing registration. Reliance was also placed on the decision of the Mysore High Court in the case of Dr. T.P. Kapadia vs. CIT (1973) 87 ITR 511 (Mys). It was also pointed out that the partners of the firm were doctors that the firm was set up to carry on the medical profession jointly and that therefore there was no question of incurring any loss. The AAC rejected the assessee's claim and upheld the ITO's Order. The assessee has come on further appeal before us. 3. The ld. counsel for the assessee besides reiterating the grounds urged before the lower authorities referred us to s. 13(b) of the Indian Partnership Act and pointed out that in this case all the th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 362 (AP) at page 373 in the last few lines and at 375 and 376). 4. We have considered the rival submissions. It is common ground that the assessee firm comprised of the following three doctors: 1. Dr. K. Venugopalarao, M.D. 2. Dr. (Mrs.) K. Vijayalakshmi, M.B.B.S., DGO and 3. Dr. (Mrs.) K. Rajeswari, M.B.B.S., The object of the partnership was to carry on the profession of medical practice under the name and style of Janaki Nursing Home at Narsapur. The deed of partnership was drawn up on 13th Aug., 1979. The relevant clauses relating to the share of the income of the firm is found in cl. 5 which reads as follows: "This shall be a partnership at will and the official year shall be the year of account of the firm and so the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so should be shared equally. Sec. 13 of the Indian Partnership Act, 1932 so far as it is relevant for the purpose reads as under: Subject to contract between the partner "13 (b): the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm:" The words "contract to the contrary" implies cases where the partners provide for sharing of profits in a particular ratio and sharing of losses in a different ratio or where the partners provide that the partners are entitled to share only the profits and some of the partners are not liable to contribute to the losses. In the instant case there is no such contract to the contrary. The learned Departmental Representative argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt took the view that unless the instrument of partnership specified the shares of the partners not only in the profits but also in the losses, the firm would not be entitled to registration rejecting the assessee's claim that cl. 9 of the deed indicated how losses were to be apportioned between the partners. The Supreme Court while affirming the judgment of Andhra Pradesh High Court referred to s. 13(b) of the Indian Partnership Act at page 6 of the 102 ITR and observed as under: "Section 13(b), it seems plain to us, makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits. In this case the shares of the partners are not equal. In the absence of any indication to the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be decided upon the terms of the deed and facts and circumstances of each case. In the same judgment at page 691 it is observed that after appreciation of document as a whole and applying the well-recognised principles of construction a conclusion is reached that the deed provided for the sharing of losses and the intent of the partners can be gathered in that behalf it cannot be said in such cases that the partnership deed has not contained any provision for sharing losses and consequently the firm cannot be refused to be registered. This observation squarely applies to this case. In fact in the case cited by the ld. Deptl. Rep. reported in (1980) 122 ITR 362 (AP) (CIT vs. Krishna Mining Co. their Lordships of Andhra Pradesh High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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