9911796707
TMI Blog1986 (3) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... a party of the first part in the deed of partnership) is described in the opening portion of the said partnership deed as follows : "Shri Narendra L. Shah (acting as partner) for and on behalf of Indian Textile Accessories Co., the existing partnership concern registered under the Indian Partnership Act, 1932." The two companies who are the other two partners of the firm are: 1. Laxmi Wire Industries (P.) Ltd. 2. Narendra Machine Works (P.) Ltd. Shri Niranjan B. Shah and Shri Surendra L. Shah are the persons who have signed the partnership deed for and on behalf of these two companies, respectively. Clause 7 which deals with profit and loss sharing ratio is as follows: "7. The profit and loss of the partnership shall be divided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Dastur, the learned counsel for the assessee, before us was that the learned Commissioner (Appeals) had erred in holding that the firm of Indian Textile Accessories Co. was partner of the assessee-firm. According to him, on a fair construction of the deed of partnership, it must be held that Shri Narendra L. Shah was partner of the assessee-firm as representative of Indian Textile Accessories Co. and that the said firm itself was not the partner of the assessee-firm. We are unable to accept this contention. We have already quoted the words in which Shri Narendra L. Shah has been described in the beginning of the deed of partnership. We have also quoted clause 7 of the deed of partnership. The deed of partnership is to be read as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dual position and that qua the partnership he functions in his personal capacity and qua the partners of Indian Textile Accessories Co., he functions in representative capacity. It also cannot be said that the other partners of Indian Textile Accessories Co. cannot enforce their rights against the other partners of the assessee-firm and that the other partners of the assessee-firm cannot enforce their rights against the other partners of Indian Textile Accessories Co. This is because Indian Textile Accessories Co. has been treated in clause 7 of the partnership deed as a partner having 25 per cent share in the profit and loss of the business of the assessee-firm. If Shri Narendra L. Shah had functioned in his personal capacity qua the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu undivided family business and an individual and that even assuming that a valid partnership had been constituted as all the members of the three firms had not personally signed the application for registration, it was not in proper form under rule 2 of the Income-tax Rules, 1962. The Supreme Court, therefore, confirmed the order of the refusal of registration. In the present case also one of the partners is a firm and the deed of partnership has been signed by a partner of the said firm and the application for registration has not been signed by all the partners of the firm, which is a partner. In fact, the assessee does not admit even at this stage that the firm of Indian Textile Accessories Co. was the partner of the assessee-firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm which was one of the partners had become partners of the assessee-firm. There was also nothing in the instrument to indicate that the other partners of the assessee-firm regarded the other individual partners of the firm which was partner of the assessee-firm as their partners or that there was mutuality amongst them. The ratio of the decision of the Bombay High Court would be applicable on the facts of this case and the learned Commissioner (Appeals) was justified in confirming the refusal to grant registration. 6. Before parting we may mention that the learned counsel for the assessee produced before us a copy of document which purported to be a deed of understanding alleged to have been executed on 4-10-1978. This deed had not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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