9911796707
TMI Blog1983 (12) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee during the year of account did not carry on any business. Hence, the question of granting registration does not arise. The assessee received rents only by leasing the godowns. Hence, I proceed to assess the assessee in the status of unregistered firm. The assessee returned a total income of Rs. 16,720. This is returned under the head Net profit as per 'Profit and loss account.' But actually, the assessee did not carry on any business during the year of account but obtained rents of Rs. 10,296 for the first period, i.e., from 1-4-1977 to 31-10-1977 and Rs. 6,425 for the period from 1-11-1977 to 31-3-1978. The case has been posted for hearing. After discussing the case with the assessee's representative, Shri V. Sundaram, C.A. present, the income returned is accepted. " " Assessment year 1979-80 : Status : The assessee filed Form No. 12 on 27-7-1979 for continuation of registration. During the previous year relevant for the assessment year 1979-80 the assessee did not carry on any business. Hence, the question of granting registration does not arise. The assessee received rents only by leasing godowns. Hence, I proceed to assess the assessee in the status of unr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee and the matter, thus, remained uncontested before the Tribunal. He, therefore, urged that the decision for this year should be rendered after due consideration of the arguments put forth and the material relied on, i.e., the various partnership deeds and in fact the entire records of the case through which he had taken us. 7. We have considered the rival submissions. For the assessment year 1977-78 also, registration had been refused for the same reasons as in the years now under consideration. The matter was taken up in appeal. The AAC upheld the refusal of registration for the same reasons as weighed with the Tribunal for the assessment year 1976-77. There was no further appeal in that year. Thus, the matter was decided ex parte by both the appellate authorities in each of the different assessment years. To decide the issue of the nature now before us, it is essential to begin at the beginning. 8. On 9-10-1975, a partnership deed was entered into between 9 persons. It is not necessary to mention the names of all the partners beyond stating that one M. Gopala Krishna and one J. Venkateswara Rao were two of the partners. Clause 2 of the deed stated that the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the said approval shall accrue and attach to the firm. Many more businesses were added to the objects of the partnership then obtaining in the earlier deed. Though there was no specific mention of letting out of godowns, it was stated that the objects would be to construct hotels, restaurants, bars, rest houses, lodgings, etc., and also many other multifarious businesses and finally to do any other business which can be conveniently or usefully carried on in continuation of the objects of the firm. According to clause 5 of the instrument, the property purchased by the two partners earlier mentioned having been transferred to the firm, all the partners acquired the shares in the same proportion to their profit-sharing ratio, i.e., the shares specified in clause 6. Shri Mootha Gopala Krishna was one of the managing partners specifically empowered on behalf of the firm to look after the construction of the building and carry on the day to day business and do all acts which was incidental to carry on the business. It was also provided that the firm would not dissolve on death or retirement of a partner. There was yet another partnership deed executed on 27-11-1978 by which three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, because of the classification of the income under several heads under the Income-tax Act, it cannot be stated that whatever is classified under the head 'Business' under the Income-tax Act alone could constitute business in the sense of the Partnership Act. So, the result is whatever may be the head of assessment under the Income-tax Act, so long as what was carried on by the firm could be classified as business in the sense of the Partnership Act the firm would be entitled to registration. " [Emphasis supplied] The above observations show that the concept of the definitions in the Indian Partnership Act, 1932 have been imported into the Act and the definitions to be considered for the purposes of deciding whether an entity is a 'firm' or not in both the Acts would, thus, be synonymous. We now come to section 4 of the Indian Partnership Act which reads as under : " 'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm', and the name under which their business is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners in this case. Therefore, the learned counsel for the appellant seems to be right when he contends that as soon as parties agreed to subscribe capital and to get shares in the profits and as soon as they started business in pursuance of this agreement, section 4, Indian Partnership Act was attracted. (8) There is no doubt that it is the carrying on of a business, not an agreement to carry it on, which is the test of partnership. In the present case, the business was actually started as is already seen above. Mr. Caphekar for the respondent, however, advanced a rather ingenious argument that till brass utensils were actually manufactured, it could not be said that 'business was carried on' within the meaning of section 4, Indian Partnership Act. In my opinion this contention is without force as each and every step taken for the erection of the factory, which was to manufacture utensils, would be considered within the purview of 'carrying on business'. This term has been used in the Indian Partnership Act in a broad and general sense. It may be observed that as soon as a partnership starts its commercial life having its own capital, its own assets and liabilities, its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
