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TMI Blog1969 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... fused registration on the ground that there was no partition between the members of the family, and there was no genuine partnership which came into being between the members of the family. The Appellate Assistant Commissioner was of a different view. In his opinion, a partnership between the Hindu joint family represented by the karta and a member of the coparcenary who became a working partner was a good partnership and that there was no legal impediment to such a partnership coming into being. He was of the further opinion that the partnership was a genuine partnership. So, he granted the registration sought by the assessees. But in the further appeal preferred by the department, the registration granted by the Appellate Assistant Commissioner was vacated and the refusal of such registration by the Income-tax Officer was restored. The question of law referred to this court reads : "Whether, on the facts and in the circumstances of the case, the agreement dated November 9, 1961, between Shri I. P. Munavalli and C. I. Munavalli brought into existence a valid partnership entitled to registration under section 185 of the Income-tax Act, 1961 ?" The Tribunal very rightly pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance before entering into such partnership. The view taken by the Privy Council in that way was accepted as correct by the Supreme Court in Bhagat Ram Mohanlal v. Commissioner of Excess Profit Tax. The discussion in that case surrounded the question whether, if a Hindu joint family entered into a partnership with strangers through its karta, the junior members of the family also became partners in their personal capacity. The Supreme Court made the pronouncement that they did not so become partners in their personal capacity and in the context of that discussion, the Supreme Court alluded to the enunciation made by the Privy Council in Lachhman Das's case, and said this : "In Lachhman Das v. Commissioner of Income-tax, it was held by the Judicial Committee that the karta of a joint Hindu family could enter into partnership with an individual member of the coparcenary quoad his separate property. It was also held by the Privy Council in Sundar Singh Majithia v. Commissioner of Income-tax, that there was nothing in the Income-tax Act to prohibit the members of a joint Hindu family from dividing some properties, while electing to retain their joint status, and carrying busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family." That this view expressed by the Privy Council was fully accepted by the Supreme Court in Bhagat Ram's case is clear from that part of the judgment of the Supreme Court which we have extracted, which reads: "It is difficult to reconcile this position with that of Chhotelal and Bansilal being also partners in the firm in their individual capacity, which can only be in respect of their separate or divided property." The question which arose in Bhagat Ram's case was whether Chhotelal and Bansilal who were the coparceners of the family also became partners individually with respect to the partnership which came into being between the family represented by its karta and the strangers, Chhotelal and Bansilal, in their individual capacity, and the Supreme Court negatived the contention that they had so become partners and what the Supreme Court said was that they could become partners "only in respect of their separate or divided property". The enunciation made by the Supreme Court in that way is not different from the enunciation made by the Privy Council in Lachman Das's case. So, it is clear that the Supreme Court did not dissent from the opinion expressed by the Privy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , had been converted into a partnership between the members of the family, and the High Court of Madras, if we may say so with respect, rightly took the view that such a partnership was not a valid partnership. The decision of the High Court of Allahabad in S. C. Mullick Sons, In re and the High Court of Madras in Govindarajulu Chettiar v. Commissioner of Income-tax, also concern the question whether the joint family could convert itself into a partnership without more and the view expressed was that it could not. So, we are of the opinion that in the case before us in which, according to the findings of the Income-tax Appellate Tribunal, C. I. Munavalli became a working partner of the firm of which he and the joint family represented by its karta, I. P. Munavalli, were the partners, it was not possible for the Tribunal to take the view that that partnership could not be entered into between the joint family and C. I. Munavalli, unless the creation of that partnership was preceded by the partition of the Hindu joint family properties. The view taken by the Privy Council that, in a case similar to the one before us, it was scarcely necessary for a partition to precede the crea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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