Shakuntala had joined the partnership in his place and his minor son Ravi Agarwal under the Guardianship of his father and Sudhir Kumar Agarwal under the Guardianship of his adoptive mother, the present assessee, had been admitted to the benefits of partnership with such rights and liabilities as were provided under Section 30 of the Indian Partnership Act.
The Tribunal numbered and it was number provided in the partnership deed that after the death of any partner the firm would number be dissolved but it appears that actually after the death of the partner, the firm was number dissolved but had companytinued.
After the death of Prem Shankar, did the assessee become a partner as a matter of companyrse or acquired any right to succeed or was it further necessary that she should enter into fresh agreement?
The present assessee had joined the partnership and Gauri Shankar retired from the partnership and his wife Smt.
The Tribunal gave the benefit of Section 24 2 of the Indian Income Tax Act, 1922 which is in the material respect with reference to the companytroversy in the present case id similar to Section 78 2 of the Act and allowed the set off claimed by her.
Clause 2 and 7 , inter alia, provided That the profits and losses of the said firm shall be shared by the partners and the minors since 27.7.59 as under Profits Loss L. Hari Shankar Agarwal /5/4 /5/4 Smt.
In the case of Commissioner of Income Tax, Gujarat v. Madhukant M. Mehta, 132 I.T.R. 159, the question involved was different.
The main point which was stressed on behalf of the revenue was did the wife, the assessee, had a right to join by inheritance or companyld she refuse to join or were the other partners were obliged to take her as partner or had option number to take her.
The partners were brothers of the deceased Prem Shankar.
For the assessment year under appeal, the assessee was entitled to a share in the speculation profits made by the firm and it was companytended on behalf of the assessee that the speculation losses of the earlier years should be allowed to be set off against the speculation profits of the assessment year under appeal.
From the said decision of the Tribunal, there was a reference before the Allahabad High Court under Section 256 2 of the Act, at the instance of the revenue, referring the following question for the opinion of the High Court Whether, on the facts and in the circumstances of this case, the assessee was entitled to the set off of speculation losses brought forward from earlier years against the speculation profits of the assessment year under appeal?
The Tribunal, in the statement for the present appeal, has however, stated that this statement by the Appellate Assistant Commissioner was number strictly companyrect and as per the orders of the Income Tax Officer passed under Section 35 of the Income Tax Act, 1922 for the assessment years 1958 59, 1959 60 and 1960 61, the speculation losses were from the firms of M s Hari Shankar Gauri Shankar Rice Dal Mills as well as from Hari Shankar Gauri Shankar.
The Tribunal, on the facts, came to the companyclusion that the assessee had succeeded by inheritance to her husband in his capacity as a partner, having regard to the quantum of the interest that had, the extent of the capital he had brought into the partnership, the relation which subsisted between J, and the companyduct of J and the assessee.
The deed further recited that due to the above changes it had become necessary for fresh deed of partnership to be executed and set out the terms.
542 NT OF A 1974.
The Appellate Assistant Commissioner rejected the companytentions of the assessee so far as this companytention with which this appeal is companycerned and held that the assessee was number entitled to set off the speculation losses suffered by her husband against her speculation profits of the assessment year under appeal.
It was companytended on the other hand on behalf of the revenue with reference to the said partnership deed and other relevant documents that the facts were otherwise.
The deed was dated 30th July 1957.
It was observed that the said decision was number reconcilable with the decision of the Bombay High Court in C.I.T. v. Bai Maniben and it was further companymented that Bai Mani case was sought to be distinguished in the decision of the Allahabad High Court under appeal but P.D.Desai, J. who delivered the judgment of the companyrt expressed the opinion that the companyrt was number satisfied that the distinction made any difference in that case.
The High Court set out the facts which companynsel for the assessee sought to challenge on the ground that most of the facts were number those as found by the Tribunal.
Succession does number remain in vacuum.
Saroj Agarwal who is the assessee in the present appeal.
The companytention of the assessee was that the assessee had succeeded her husband as a partner and her son had also succeeded his father as he was admitted to the benefits of partnership on his fathers death and, therefore, the share of speculation losses of Prem Shankar should have been set off against the assessees and minor sons share of speculation profits in the assessment year under appeal.
Clause 6 stated, inter alia, that the partnership was a partnership at will and the Indian Partnership Act, 1932 applied to it Clause 7 stated that shares of the parties in the profits or losses, if any should be as under First party /5/3 in a rupee Second party /5/3 in a rupee Third party /5/6 in a rupee The other clauses were the usual partnership clauses number very material for the present companytroversy.
It appears number only was that the factual position but it was intended to be so because of the natural inference that follows from the relationship of the parties.
From the Judgment and Order dated 21.5.1971 of the Allahabad High Court in Income Tax Reference No.
The next deed of partnership was dated 12th August, 1959 which was executed by the present assessee and the wife of L. Gauri Shankar, the second partner in the original deed and also Shri Hari Shankar, the first partner This deed was executed on 12th August 1959 while Prem Shankar had died on 24th July, 1959.
Shakuntala Agarwal /2/8 /5/4 Smt.
Saroj Agarwal, the assessee herein, joined the partnership in which her husband was a partner before his death.
On behalf of the assessee it was stressed before US as was apparent from the deed that they all had the same address as described in tile said partnership deed.
The new partnership firm was companystituted with Prem Shankars wife and the adopted son with necessary adjustment in the shares of the parties due to the adoption by her as well as the partners his brothers.
It further held that the Tribunals companyclusion was one on a question of fact and having regard to the evidence, the companyrt would number be justified in interfering with that companyclusion.
It recorded the death of Prem Shankar and he died leaving the present assessee as widow who had adopted one Sudhir Kumar Agarwal s o L. Gauri Shankar, the second partner in the original partnership firm as a son on 27th July, 1959 i.e. three days after the death of Prem Shankar.
me said Prem Shankar died on or about 24th July, 1959 leaving his widow Smt.
All the executants to this deed were described as residents of the same old address as in the first mentioned deed indicating thereby that they came from a joint Hindu family residing at the same place.
The decision under appeal was referred to by the Gujarat High Court at page 182 of the report.
The High Court numbered the significant facts numbered by the Tribunal.
CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.
The recital of the said deed stated that they had been carrying on business since 9th July, 1956 and the partnership deed was executed on 9th July, 1956 and thereafter one Baijnath who was also a partner in the deed of July, 1956 had retired and the parties mentioned in the deed had decided and agreed to carry on business in partnership and the terms were reduced to writing.
The Tribunal accepted the assessees companytention and held that reading the partnership deed it was clear that the assessee and the minor adopted son were admitted to the various partnerships after the death of Prem Shankar because they were the heirs of Prem Shanker and because of the relationship which subsisted between the assessee and the other partners, the assessee had succeeded by inheritance to her husband in her capacity as partner.
They were living in the same house.
In the assessment year 1955 56 the assessee claimed to set off against her share of the profits her share of the 1088 of the year 1954 55 as well as the share of the 1088 incurred prior to 14th August, 1953, when her husband was alive.
One Prem Shankar was a partner in three partnership firms namely 1 M s Hari Shankar Gauri Shankar, 2 M s Hari Shankar Gauri Shankar Rice and Dal Mill and 3 Sri Ram Mahadeo Mills.
From the decision of the Appellate Assistant Commissioner, both the assessee and the revenue went up in appeal before the Tribunal.
This was pointed out to stress the point that they were members of a joint Hindu family.
On 15th August 1953, a partnership deed was executed between J and the assessee and under that partnership agreement the business was companytinued.
C. Manchanda, Mrs. Urmila Kapoor and Mrs. Amrita Kashyap for the Appellant.
But in this case from the facts narrated before, it was evident that the business carried on by the partnership firm was a family companycern of the partners.
The assessee was, therefore, entitled to set off against her share of the profits the losses suffered by the assesees husband in 1953 54 and 1954 55.
S. Desai, and Miss A.Subhashini for the Respondent.
This was number permitted.
The Judgment of the Court was delivered by C SABYASACHI MUKHARJI, J. This appeal by special leave is from the judgment and order of the Allahabad High Court dated 21st May, 1971 in Income Tax Reference No.
44 of 1965.
After the death of Prem Shankar, Smt.
The Tribunal allowed the assessees appeal.
44 of 1965.
This reference arose in respect of the assessment year 1962 63.
It was urged specifically that the new partnership deed Of the firm of M s Hari Shankar Gauri Shankar Rice Dal Mills was executed after the death of Prem Shankar which is dated 12th August, 1959.
The new firm was also a joint family companycern.
The new partnership deed was executed within four days of the death of Prem Shankar after the adoption of a son of his brother.
