9911796707
TMI Blog1992 (7) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... t be in a position to ascertain the shares of the partners in all possible eventualities. A decision of Hon'ble Supreme Court reported as Mandyala Govindu Co. vs. CIT 1976 CTR (SC) 20 : (1976) 102 ITR 1 (SC) was pressed into service. Yet further, it was reasoned that from the deed of partnership executed on 17th March, 1979, which is in force during the relevant period in this case, does not deal with the distribution of profits or loss in all possible eventualities. He held that there was no genuine firm in existence. CIT vs. Rupchand Routhmall (1963) 50 ITR 295 (Cal) and N.T. Patel Co. vs. CIT (1961) 42 ITR 224 (SC) were discussed. 2. Feed-back of the facts is that the assessee was treated as a registered firm by an order made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of status was not before him, he directed in quantum appeal by the assessee, the Assessing Officer to examine the genuineness of the firm. As a result of above directions, orders under s. 186(1) of the Act was made. 4. De hors the controversy, the issue can be summarised in the following terms: (i) That the four persons joined hands to form a partnership and; (ii) the first and the third parties were to share the profits/losses in the ratio 55:45 but this was subject to a rider that the division in case of loss shall be solely to the account of these two parties, viz., 1 and 3. In case of profits, parties of 2nd and 4th were to have shares to the extent of Rs. 10,000 and Rs. 12,000 respectively and the residue was to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1932 come into play. 5. On the facts and in the circumstances of the case, it is specifically mentioned in the deed of partnership governing the relationship between the parties who constitute the partnership here that in case of losses, it shall be borne by parties of 1st and 3rd part in the ratio/proportion of 55:45 respectively. In case of profits, if it exceeds Rs. 22,000 then the party to the 2nd part will get Rs. 10,000, party of 4th part Rs. 12.000 and the residue shall be apportioned between parties of 1st and 3rd part in the ratio/proportion of 55:45 respectively. In case the profits are less than Rs. 22,000, then parties of 1st and 3rd part shall not be entitled to any profit, i.e., total profits shall be apportioned betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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