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TMI Blog1983 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... heirs and legal representatives of the deceased partner at their option were entitled to be taken in as partners in place and stand of such deceased partner. Shri Purna Chandra Barick made a will on 22-5-1970. He appointed Smt. Sarala Bala Barick, widow of his son, Manmatha Nath Barick (deceased) and Netai Chandra Barick, son of the said Manmatha Nath Barick, to be executrix and executor. Various directions were given in the will in respect of several properties and liabilities of Shri Purna Chandra Barick. In particular, Shri P. C. Barick directed in respect of his 10 shares in Purnasree Cinema as below : " I give device and bequeath the 3/4th part or share of my remaining 10/16th share of and in the said messuages land hereditaments and premises of the said 'Purnasree Cinema' being the said premises No. 2/1B, Raja Raj Kissen Street in the town of Calcutta as also my 10/16th share in the name of the said Cinema business at the said premises to the said Nader Chand Barick, Madhusudan Barick and Jadunath Barick all sons of my grandson the said Netai Chandra Barick to be held and enjoyed by them absolutely in equal shares and the remaining 1/4th part or share therein to my said gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he event of any of the said sons of Netai Chandra Barick being minor at the time of my death his share of the income shall be paid to his natural guardian provided also that my executrix and executor shall not be entitled in any event to interfere with the management of the said business of 'Purnasree Cinema'. After the death of the said Netai Chandra Barick the right of management shall be exercised by the said Nader Chand Barick, Madhusudan Barick, Jadunath Barick and Kumari Jaya Bati Barick so long as the said Jaya Bati Barick is alive." 3. Shri Purna Chandra Barick died on 27-5-1970 and a partnership deed between Netai Chandra Barick, son of Manmatha Nath Barick (deceased) in his individual capacity holding 6 shares and Smt. Sarala Bala Barick, wife of late Manmatha Nath Barick, and the aforesaid Netai Chandra Barick as executor and executrix to the estate of P.C. Barick (deceased) jointly holding 10 shares was drawn on 15-6-1970. In the preamble to the said partnership deed it has been provided : "AND WHEREAS it is inter alia mentioned in the said last will of said Purna Chandra Barick deceased that on the death of Purna Chandra Barick the business of said Purnasree Cinema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remain with the grandson Shri Netai Chandra Barick, and his executor and executrix would not be entitled in any event to interfere with the management of the said business of Purnasree Cinema. After the death of N.C. Barick the right of management would be exercised by other persons, namely, S/Shri Nader Chand Barick, Madhusudan Barick, Jadunath Barick and Kumari Jaya Bati Barick. It is, therefore, clear that Smt. Sarala Bala Barick had not been given any right in respect of this property of late P.C. Barick except to receive Rs. 2,000 per month for her life. The business unit under review is purported to have been created by a document dated 15-6-1970. It is claimed that the estate of late P.C. Barick is a partner. Inasmuch as Smt. Sarala Bala Barick had signed this document creating this partnership as executrix of the will of late P.C. Barick, the genuineness of the firm itself may be open to serious question since late P.C. Barick in his will appointing Smt. Sarala Bala Barick also as one of the co-executrix had specifically denied her any management right over her interest in Purnasree Cinema. In Kaura Lal Vishwan Das v. CIT [1954] 26 ITR 642 (Lahore), a similar situation aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 965] 56 ITR 219 and CIT v. Sir Hukumchand Mannalal Co. [1970] 78 ITR 18. They further held that-- ' . . . they would not warrant acceptance of the general proposition that it would be permissible in law for an association of persons to be collectively a partner of another partnership, or each of them would thereby become a partner.' It was held finally that-- '...The true position under the deed of partnership as it appears to us is that the two of them jointly or collectively have been constituted a single partner and it is only when they act jointly that they can purport to exercise the rights of a partner. In our opinion, such a partner is not contemplated in law and a partnership having such a partner cannot be considered to be legally valid. If there is an agreement constituting such a partnership, it will have to be regarded as being contrary to law and, therefore, on that count, in our opinion, the ITO was entitled to refuse registration.' The treatment of the deed under consideration here and the facts of the case being on all fours I am of the view that in the present case no lawful valid partnership has been constituted by a document dated 15-6-1970 is held in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of National Non-Ferrous Industries v. CIT [1980] 121 ITR 130. 6. We have considered the rival submissions and gone through the orders of the lower authorities. The first ground on which the Commissioner (Appeals) held that the firm was not genuine is that Smt. Sarala Bala Barick, who was taken as a partner, had not been given any right in respect of the property left by late P.C. Barick except to receive Rs. 200 per month for her life. Admittedly, Smt. Sarala Bala Barick was appointed as an executrix in the will left by late P.C. Barick. According to section 211 of the Indian Succession Act, the executor or executrix derives title and interest from the will immediately upon the testator's death. After the death of the testator his property vests in the executor inasmuch as law knows no interval between the testator's death and the vesting of property. That section further provides that while the property vests in the executor, even though it may afterwards be found to have been wrongly so vested, as in the case of a forged will, all the acts of the executor in respect of such property must be regarded as valid. According to section 211 of the Indian Succession Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bombay High Court in the case of National Non-Ferrous Industries as relied on by the Commissioner (Appeals) was to the contrary. It is, however, to be noted that the ITO refused to grant continuation of registration on the ground that Form No. 12 was not signed by the executrix, Smt. Sarala Bala Barick. It is true that under rule 24 of the Income-tax Rules the declaration under section 184(7) in Form No. 12 shall be signed by all the partners but a perusal of the partnership deed would show that Shri Netai Chandra Barick and Smt. Sarala Bala Barick were jointly made one partner. In other words, Smt. Sarala Bala Barick was not taken as a partner in her individual capacity. Section 311 provides that when there are several executors or administrators, the powers of all may, in the absence of any direction to the contrary, be exercised by any one of them. Moreover, the preamble to the partnership deed provides : " AND WHEREAS it is inter alia mentioned in the said last will of said Purna Chandra Barick deceased that on the death of Purna Chandra Barick the business of said Purnasree Cinema wherein Purna Chandra Barick had 10 annas share will be managed by the surviving partner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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