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TMI Blog1970 (8) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... was delivered by GOVINDA BHAT J.-[After setting out the stat I of caw as Govinda Bhat J. contiued.) The question of law referred under section 256(1) of the Income-tax Act, 1961, for our opinion is: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assesseewas Dot entitled to the benefit of registration for the assessment year 1962-63 ? " The reference relates to the assessment year 1962-63, the corresponding accounting period being the financial year April 1, 1961, to March 31, 1962. The instrument of partnership is dated March 30, 1962. The partnership consisted of four partners of whom No. 1, Sayyad Hafeez Saheb, was the managing partner; No. 2, Abdul Warris Saheb, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sential ingredients of the partnership are that there should be an agreement to share the profits and losses of the business and each of the partners should be acting as the agent of all. It is not the case of the department that the partnership in question is not a genuine one. Their contention is that, in view of the provisions of clause 5 aforesaid, no valid partnership came into existence. Under the said clause, the managing partner has been conferred with the power to admit new partners, raising additional funds and loans, etc., for the business and the power to expel any of the working partners if it is found that their continuance in the firm is detrimental to the interest of the firm and further that the working partners have to see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulsion.--No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners. A power of expulsion conferred by articles of partnership cannot be exercised to determine a partnership at will arising after the expiration of the term. The power must be exercised in the utmost good faith by all the partners whose concurrence may be necessary under the partnership contract." In Carmichael v. Evans, a provision in the articles of partnership conferred power of expelling a junior partner on a senior partner and that power was held to have been validly exercised. In Balubhai Gulabdas Navlakki v. Commissioner of Income-tax, the instrument of partnership conferred power on a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the agreement satisfied all the essentials of a valid partnership and as such entitled to registration. In City Tobacco Mart v. Commissioner of Income-tax, this court held that the overriding powers given to the first two partners under clauses 2 and 4 of the deed of partnership were not such as to destroy the character of partnership. It was held that under the provisions of the Partnership Act, the parters could contract for the introduction of new partners with out the consent of all the original partners. In Commissioner of Income-tax v. K. D. Kamath Co., relied an by the Tribunal on the facts of the particular case, it was held that the element of agency was lacking. The terms of the deed of partnership in the said case ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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