9911796707
TMI Blog1964 (4) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed to income-tax for the assessment year 1945-46 on December 9, 1952. Subsequently, the appellant was required by the Naib Tahsildar (Collection) to pay up the amount of income-tax, and the appellant says that it was then for the first time that he came to know that the firm had been assessed. It is said that no notice was given to him of the assessment proceedings against the firm or of the assessment order made consequent to those proceedings. The appellant challenges the demand of income-tax made upon him on the ground that he was not a partner when the assessment was made and that having sold his interest in the partnership firm he was not liable to any income tax liability assessed after such transfer, and the demand made upon him wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in t?is case, and it is one which cannot be resolved in the present appeal having regard to the contents of the affidavits. But, even were we to assume in favour of the appellant that he had indeed transferred his interest in the partnership firm in favour of Ram Chander, we are of the opinion that upon the mere transfer of such interest the appellant did not cease to be a partner of that firm. That that is so is clear from the provisions of section 29 of the Partnership Act, which provides as follows: "(1) A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm, to interfere in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits can only belong to the transferring partner if he can be said to continue as a partner. Moreover, upon dissolution of the firm or the transferring partner's ceasing to be a partner the transferee is entitled to receive the share of the assets of the firm to which the transferring partner would be entitled. That again postulates that the transferring partner continues to be a partner of the firm even after transfer of his interest, but if he ceases to be such subsequently or the firm is dissolved his share in the assets must be made over to the transferee. We would, therefore, hold that the appellant continued to be a partner of the firm notwithstanding the transfer of his interest to Ram Chander. There is no clear averment by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t behind, and with it the distinction between the firm and its partners. Section 29, under which the notice of demand is issued, indicates in terms that the assessment proceeding has been concluded and that tax is due in consequence of the assessment order. It provides that when tax is due in consequence of an order passed under the Act the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax a notice of demand specifying the sum so payable. Therefore, when a notice of demand is issued by the Income-tax Officer in the name of the firm it is a demand upon the partners of the firm who are liable to meet it in the same manner as a demand made in respect of any other liability of the firm. The liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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