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TMI Blog1986 (10) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be taken over by the continuing partners. The retiring partners would be given their share of profit for the accounting year concerned till the date of dissolution by calculating the net profit at 1-1/2 per cent of the turnover of that period. This is to be paid within 15 days after the finalisation of the accounts. 4. On 24th Dec., 1981, another partner was inducted. A new partnership deed was executed. This partnership deed stated in the preamble that Apparao and Mallikharjunarao who are partners had retired from the partnership deed with retrospective effect as from 1st April, 1981 and the new partner was being taken in. cl. 3 of this deed stated that the partnership shall be deemed to have come into operation w.e.f. 1st April, 1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration. Both the ITO and the AAC have accepted that a genuine firm was in existence till 30th Nov., 1981. The question is whether the new partnership deed has to be accepted as a valid partnership deed so that the firm is entitled to registration throughout the year. In substance, the only reason given for treating the latter firm as invalid is inconsistency as to the date of retirement of the two partners. The dissolution deed clearly mentions the date as 30th Nov., 1981. The partnership upto this period is accepted as genuine and valid. The Department has not doubted the correctness of the narration in the dissolution deed. Therefore, factually, the two partners retired only on 30th Nov., 1981. It is true that the partnership deed dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Deed." The above extract from the preamble narrated what had happened earlier. That narration is clearly wrong. It is wrong because the dissolution deed does not say that they have relinquished their interest retrospectively from 1st April, 1981. The preamble of the dissolution deed stated as follows: "Whereas the parties on mutual consent have agreed that the partnership should be dissolved, the partnership w.e.f. 1st Dec., 1981 as per the terms and conditions set forth hereunder, it is hereby agreed, laid down, and witnesseth as under: 1. The firm of M/s Sri Srinivasa Medical Agencies Ongole stood dissolved w.e.f. 1st Dec., 1981; 2. It has been agreed between the partners that all the assets and liabilities of the firm sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utgoing partners are entitled to the profit upto the date of their retirement. Since books were not closed, there must be a method acceptable to all the partners for ascertaining the profit upto 30th Nov., 1981. This method was to estimate the net profit on the turnover upto 30th Nov., 1981. This has been done. However, Sri Jayakar pointed out that even in the allocation made appears to be erroneous. Though, both the partners are entitled to equal share or profit, yet one partner was credited with Rs. 820 and the other partner Rs. 6,177. This has to be a mistake. Again on the basis of the ratio in Venkateshwararao's case, this is an honest mistake and should not stand in the way of registration. 11. In view of the above, we are of opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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