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TMI Blog2017 (8) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... of profit and loss per partner. If that be so, the partners are free to have a provision similar to clause-7, leaving the manner of apportionment to be decided by the partners. So long as this clause reflects an agreement between the partners, irrespective of its vagueness, Section 13(b) cannot be invoked. The upshot of the above discussion that the question of law raised as to whether the Revenue could rely on Section 13(b) of the Indian Partnership Act has to be answered against the Revenue and in favour of the assessee. - W.T.A. Nos.19 of 2002, 14 of 2003, 154, 171, 173, 178, 181, 182, 184 of 2009, ITR Nos.15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25 & 26 of 2001 - - - Dated:- 28-7-2017 - MR . ANTONY DOMINIC AND MR . A . MUH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Contract Act lays down that all partners are entitled to share equally in the profits of the partnership business, and must contribute equally towards the losses sustained by the partnership . As I read the section, it lays down two presumptions with which the court should start . The two presumptions are clubbed in one sub - section . The first is, if no specific contract is proved, the shares of the partners must be presumed to be equal . In the present case, the plaintiff alleged unequal shares which were not denied by the defendants . So the parties being agreed on their pleadings as to the shares possessed by them in the profits, there is no scope for the application of this first presumption . The second pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mulated to absorb losses of the firm and for other contingencies till such time as the partners decide otherwise, so however that at least 50 per cent of the accumulated profits of a year after setting off any brought forward loss shall be distributed among the partners and the beneficiary in any event before the expiry of three years from the date of accumulation . The partners do not have any specified or equal share in the accumulated profits and the partners shall decide the amount to be credited or debited as the case may be, to any one or to each partner at any time, giving weightage to the circumstances of the case . An outgoing or retiring partner shall have no share in the accumulated profits and on death, the estate of a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t context, it was held thus: So far as the first question is concerned, the assessing authority held that section 13 ( b ) of the Partnership Act applies and hence all the partners share profits equally and the share was fixed at 20 per cent . But as rightly stated by the Tribunal, section 13 ( b ) of the Act applies only when there is no contract to the contrary . A look at clause 7 of the partnership deed would show that there is contract to the contrary . As to what share a partner will be entitled to is not specific . As a matter of fact, this question came up for interpretation in the decision in CIT v . Saraf Trading Corporation [ 1999 ] 239 ITR 41 ( Ker .). A Division Bench of this court wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. However, the learned Senior Counsel for the Revenue raised a contention that in the absence of any specification in clause-7 of the Partnership Deed regarding the percentage of profit or loss per partner, the Revenue was entitled to take recourse to Section 13(b) of the Indian Partnership Act. Having considered this submission, we confess our inability to accept the contention. This is for the reason that there is no provision in the Partnership Act requiring that the Partnership Deed should contain the ratio of profit and loss per partner. If that be so, the partners are free to have a provision similar to clause-7, leaving the manner of apportionment to be decided by the partners. So long as this clause reflects an agreement betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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