9911796707
TMI Blog1980 (5) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... e three partners up to 30th June, 1974. Two partners retired on 30th June, 1974 and in their place, a new partner, Smt. Vimla Devi was admitted on 1st July, 1974. Thus, the partnership was constituted on 1st July, 1974 by two partners one old, Smt. Panni Bai and the other new partner, Smt. Vimla Devi. The firm applied for registration in Form No. 11 and 11A. Smt. Vimla Devi was examined by the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that either a partner should contribute capital, or skill, or labour, and there being no contriclution either capital, or skill, or labour no genuine partnership was constituted. No law has been shown by the Revenue to support its contention. In our view the contract of partnership is like other contracts. Under the general law i.e. the Law of Contract, two or more major partners can enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of burden or "detriment", as the English authorities call it. Where the consideration is a present performance and not a promise, the detriment may consist either in actually parting with something of value, or in undertaking a legal responsibility, or in foregoing the exercise of a legal right". 3. From this commentary, it is clear that "consideration" need not be always in cash or in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is without consideration. In a business, the normal expectation is of profits but the possibility of arising the losses cannot be ruled out. Smt. Vimla Devi having agreed to share the losses, our view, entered into the agreement, with consideration. Thus, all ingredients of valid contract are present in this case and the case is not hit for want of consideration. There is no clause in the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that there was change in the constitution of the firm, it means that the firm continued according to him, even after 1st July, 1974 and, therefore, he cannot say that there was no genuine firm in existence on or after 1st July, 1974. We are, therefore, of the view that the AAC rightly held that a genuine firm was constituted by Smt. Panni Bai and Smt. Vimla Devi. The ITO was, therefore, not righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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