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TMI Blog1964 (11) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... As. (1) G. Venkataswami Naidu ... 2 (2) G. T. Narayanaswamy Naidu ... 2 (3) G. T. Krishnaswamy Naidu ... 2 (4) M. A. Palaniappa Chettiar ... 5 (5) R. Guruswamy Naidu ... 2 1/2 (6) R. Venkatasubba Naidu ... 2 1/2 By subsequent transactions the share of G. Venkataswami Naidu was transferred to his son, Vidyasagar, and the share of M. A. Palaniappa Chettiar was purchased by R. Guruswamy Naidu, with the result that the 5th partner, G. Guruswamy, had 7 1/2 annas share in the partnership instead of 2 1/2 anns share which he held earlier. Guruswamy Naidu and Venkatasubba Naidu, the 5th and 6th partners, belonged to a Hindu undivided family and the beneficial interest of their shares belonged to that family ; indeed, during the previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said two partners. The assessee-firm presented the deed of partnership dated November 30, 1950, before the Income-tax Officer for registration for the assessment years 1952-53, 1953-54 and 1954-55 and was duly registered under section 26A of the Indian Income-tax Act, 1922, hereinafter called the Act. In due course, Guruswamy Naidu and Venkatasubba Naidu were assessed as partners of the assessee-firm on their respective shares as shown in the partnership deed. But the Income-tax Appellate Tribunal, in respect of two of the assessments made on them, accepted their contention and held that they were liable only to pay tax in respect of the shares shown in the partition deed. After the decision of the Tribunal, the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtnership deed did not specify the correct shares of Guruswamy Naidu and Venkatasubba Naidu in that while they were entitled only to 2 annas and 1 anna 4 pies share in accordance with the partition deed, they were shown in the partnership deed as holding 7 1/2 annas and 2 1/2 annas shares respectively and, therefore, the Tribunal rightly held that the said partnership could not be registered under section 26A of the Act. Mr. Swaminathan, learned counsel for the respondent, contended that the partition of the family's beneficial interest in the partnership business has no relevance to the question of registration of the partnership under the Act, for, according to him, the income-tax authorities are only concerned with the validity and gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a trustee ; he may enter into a sub-partnership with others ; he may, under an agreement, express or implied, be the representative of a group of persons ; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership, he functions in his personal capacity ; qua the third parties in his representative capacity. The third parties, whom one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner-representative in accordance with law or in accordance with the terms of the agreement, as the case may be. If that be so, Guruswamy Naidu could have validly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e commission from each of two of the managing agencies and the balance in those agencies and the commission in the other four managing agencies were divided into five equal shares between himself, his wife and three minor sons. The memorandum of partition recited that the parties had decided that commission which accrued from January 1, 1946, ceased to be joint family property and that each became absolute owner of his share. Notwithstanding the partition, the income-tax authorities assessed the said total income as the income of the joint family. The Bombay High Court agreed with that view. But this court held that as the partition document was a genuine one, it was fully effective between the members of the family and therefore the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of the karta as a partner vis-a-vis the other partner or partners in a pre-existing partnership, because the law of partnership and Hindu law function in different fields. If so, on the same principle, a divided member or some of the divided members of an erstwhile joint family can certainly enter into a partnership with third parties under some arrangement among the members of the divided family. Their shares in the partnership depends upon the terms of the partnership ; the shares of the members of the divided family in the interest of their representative in the partnership depends upon the terms of the partition deed. For the aforesaid reasons we hold that the High Court has given correct answers to the questions propounded. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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