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TMI Blog1980 (8) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the orders of the lower authorities and the papers included in the assessee's paper book. It is seen from the ITO's order that he noticed that there was a basic difference in profit sharing ratio as provided in the deed and as actually effected in the books of account and that the partnership deed could not be treated to have been signed by all the partners because no body could sign on behalf of God, nor God can be made a party to the business activities. He gave a notice to the assessee who sent a written reply dt. 15th March, 1978 stating therein that reasonable construction of the deed would show that 99 paisa of every rupee of the net profit had been apportioned amongst the partners equally and the balance one paisa profit was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unsound and the assessee is entitled to registration. Shri Kapoor the counsel of the assessee filed a copy of partnership deed dt. 1st Sept., 1974 and a copy of trading-cum-profit and loss account of assessee firm and copies of capital accounts of the partners. The partnership deed at so many places in various clauses stresses the fact that there were only three partners and God had nowhere been shown to be taken as partner in the deed. The controversy had arisen from cl. 12 of the deed which we reproduce below: "12. That after deducting wages and other expenses from the gross profit the net profit will be disbursed as under: 1. Shri Ganpatrai. 33 paisas per rupee. 2. Shri Ram Parkash Gupta 33 paisas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties were clearly wrong when they made Dharmada a partner and made it liable for losses and entitled to a share in the profits. The terms of this deed are referred in the statement of case at pages 915 to 916. It is clear from the reading of the statement of case that Dharmada had been admitted as a partner, given a share in profits and as per cl. 3 it was not only to receive profits but also to share in losses. This is not the position in the assessee's case. We have pointed out that the deed at several places categorically mentions that there were three partners only and a disbursement of one percent of profits had been provided in the name of God in cl. 12. From this fact of disbursement of one percent of profit, we do not think it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable income of the assessee. 6. Though it is not necessary to go into that point as the ITO had not pressed it after getting the assessee's reply dt. the 15th March, 1978, still we may like to clarify the factual position about what it described by the ITO and also upheld by the AAC about profits not being allocated amongst the partners according to the instrument of partnership. The ITO observed in his order that there was a basic difference in profit sharing ratio as provided in the deed and as actually effected in the books of accounts. We also gave the figure of the profit allocated amongst the partners at Rs. 4,229.44 for each partner. It was rightly pointed out on behalf of the assessee that the ITO has wrongly noted the factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of any other point was not disputed by the ITO and, therefore, such undisputed point cannot be allowed to be unsettled since the departmental representative chooses to argue this for the first time as a new plea. Besides the question of sharing of profits will depend on the facts involved in each case and the reading of the partnership deed. On the reading of the deed, the ITO did not find any such difficulty and, therefore, did not pose any question to the assessee. When this is the state of affairs it can not be said that the departmental representative can call in question the view taken by the ITO and can start writing his order according to his own light. This will amount to reviewing of the findings of the ITO and substituting a new ..... X X X X Extracts X X X X X X X X Extracts X X X X
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