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TMI Blog1966 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely : (1)H. Mohamed Khan, (2)Mohurunnisa Begum, (3)N. Mohamed Khan, (4)H. Gaffar Khan, (5)Mirza Habibulla Baig. Out of these, number 2 is the wife of number one, and number 3, the son of number one. Numbers 4 and 5 were employees under number one. The capital was to be contributed only by the first two in the sum of ₹ 6,00,000 by the former and R. 55,500 by the latter. The assessing authority, the Income-tax Officer, refused registration. In the personal assessment of H. Mohamed Khan, he also held that the sum of ₹ 55,500 shown as capital contribution by the wife was in fact not her money, but a contribution by the husband himself. Upon Appeal, the Appellate Assistant Commissioner accepted the finding that the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law : "Whether, on the facts and in the circumstances of the case, the Tribunal was right on the material before it in holding that the firm constituted under the partnership deed dated March 12, 1951, is not a genuine firm?" The present reference is one made pursuant to that direction. The Tribunal gave two principal reasons in support of its conclusion : ( i) that the finding accepted by the first two authorities that what appeared to be capital contributed by the wife was really the contribution by the husband, was sufficient to make out that the wife did not acquire the status of a partner ; (ii) that the overriding powers given to the first two partners in clauses (2) and (4) of the deed of partnership were such as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of profit in the accounts. It is open to the first and second partners to take in more partners and to change the share of the profit of the working partners as agreed to herein......... (4) The business of the partnership shall be managed by H. Gaffar Khan, the working partner of the fourth part, with the assistance of the working partners of the third and fifth parts, and in his absence by N. Mohamed Khan, the working partner of the third part, under the supervision of the first and second partners." Regarding the fourth clause, the Tribunal itself does not seem to think that it would necessarily make any difference to the situation, because immediately after quoting the clause they state, "we do not intend to say that per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, if there is nothing out of the way-and it is in fact not uncommon-to provide for special considerations in favour of a capitalist or a financing partner in protection of his financial or proprietary interest, it should make no difference whether there is only one such partner or more partners than one in a partnership. The power given to the financing partners to introduce new partners may also, in one sense, be related to the same idea of protecting their financial and proprietary interests. What is of real importance is not the positive power given to the first two partners to introduce new partners, but the implied deprivation of a similar right in the other three partners. In the absence of such a provision, it would have been impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than what is stated above was taken into account by the Tribunal to come to the conclusion that the partnership was not a genuine one. All that the Tribunal says is that "taking into consideration all the relevant facts and the manner in which the rights and obligations of the persons inter se are defined ........", it was unable to say that the working partners were really partners. In the light of the foregoing discussion, it becomes clear that not only was there no material in support of the conclusion of the Tribunal but that such material as there is points to the partnership being a genuine one rather than otherwise. We, therefore, answer the question referred to us in favour of the assessee as follows : On the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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