9911796707
TMI Blog1990 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ip deed dt. 21st Oct., 1979 with 10 per cent share in the profit and losses. The firm had development rebate reserve of Rs. 11,22,032 which was created in asst. yr. 1976-77. At that time, the partners of the firm were: 1.M/s Bakhtawar Construction Co. Pvt. Ltd. 75 per cent 2.Mr. N.M. Irani 10 per cent 3.Mrs. Z.S. Lawyer 10 per cent 4.Miss. S.M. Irani 5 per cent On and w.e.f. 1st Oct., 1979. Miss S.M. Irani retired from the firm and the assessee became a partner. The new shares were agreed to be 1. M/s Bakhtawar Construction Co. P. Ltd. 65 per cent 2.Mr.N.M. Irani 15 per cent 3.Mrs. Z.A. Lawyer 10 per cent 4.Mrs. Bakhtawar B. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had been given no share and the entire development rebate reserve was allocated as per the sharing ratio of the partners prevailing in the asst. yr. 1976-77. He also drew our attention to the computation of net wealth and the assessment order Miss S.M. Irani wherein even after the retirement w.e.f. 1st Oct., 1979, the 5 per cent share in the development rebate reserve was declared by her for asst. yr. 1980-81 and assessed as such by the WTO. He also contended that development rebate reserve was nothing but unallocated profits, which was to be shared only by those persons, who were the partners in the year of its creation. 4. We have heard the parties and considered their rival submissions. The partnership, as defined in s. 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unallocated profit belonged. The partnership deed is silent on this point. There is no specific provision in the Partnership Act to deal with such a situation. We, therefore, have to gather the intention of the parties from the surrounding circumstances and their subsequent conduct. Two material pieces of evidence are available in this regard (1) the assessment records of Miss S.M. Irani, who went out of the firm w.e.f. 1st Oct., 1979 and (ii) the allocation of development rebate reserve by the firm, when it was written back in 1985-86. In the wealth-tax assessment of Miss S.M. Irani, the 5 per cent interest in the development rebate reserve was being assessed to be belonging to her as on 31st day of March, 1980 even though she had retir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted the firm in the year 1976-77 and in the ratio they had in that year. These two factors, in our opinion, clearly establish that the parties intended that they had interest in the development rebate as per the sharing ratio of the year of creation of the development rebate reserve. At that time, the assessee was not a partner and, therefore, she had no right therein and that is why she was not given any share therein at the time of transferring the development rebate reserve, to the individual accounts of the partners. On the aforesaid facts and circumstances of the case, we confirm the orders of the CWT(A) in holding that no part of the development rebate reserve was assessable in the hands of the assessee as she was not a partn ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
