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TMI Blog1988 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... (now referred as "the senior partners"). By a deed of partnership dated October 12, 1967, one K. H. Doshi and Charulata, till then employees, joined the senior partners (and are now referred to as "the junior partners"). Clause 14 of the deed of partnership dealt with the division of net profits appearing in the yearly accounts and, subject to annual increments and such bonus as was agreed upon, stated that K. H. Doshi would receive Rs. 12,000 per year and Charulata would receive Rs. 5,100 per year. By reason of the provisions of the said clause 14, the Income-tax Officer refused registration to the firm on the ground that the conditions specified by section 184(1)(ii) of the Income-tax Act, 1961, were not satisfied. In appeal, the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the partners acting for all. They noted the provisions of section 6 which stated that in determining whether a firm existed or not, or whether a person was a partner or not, regard had to be had to the real relation between the parties, as shown by all relevant facts taken together. The learned judges found that the Tribunal, in the case before them, had not kept in mind the test provided by section 6. They found, on examination of the facts, that the conclusion reached by the Tribunal entitling the firm to registration was erroneous. It is difficult to see how this authority assists the Revenue in the pre sent case. The assessing authorities refused registration to the assessee only because the deed of partnership provided that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant was to get a particular fixed sum. In other words, the defendant thus became a salaried partner which is an expression we are quite familiar with not only in England but also in Bombay." Section 239 of the Contract Act which governed the relationship of partners at the relevant time required them "to share the profits". Amberson Marten C. J. laid, in this regard, emphasis on the words "in lieu of share of profits" in the partnership deed. In the present case, the said clause 14 speaks of the division of net profits, The shares of the junior partners in the profits are the fixed sums set out in the said clause 14. Their shares do not have to be some stated proportion of the profits. The only argument advanced on behalf of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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