The rest of the terms followed the same pattern as before.
ceased to be partners either by retirement or death, and Whereas the remaining partners 1 Nagjee Narayanjee and 3 Maneklal settled the claims in full of the partners who ceased to exist and agreed to carry on and companytinue and are companytinuing the existing partnership business under the name and style of Sait Nagjee Purushotham Co. Bankers, Piece goods and Yarn Merchants, hereinafter called the Firm and Whereas it is thought advisable and prudent to reduce into writing the terms and companyditions agreed upon orally by them the Partners agree and have agreed to the following terms and regulations stipulated hereunder.
All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerjee Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham and Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah Nagjee Purushotham Co., the terms and companyditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners.
Of the original partners, Premchand retired in 1912 and another member of the family Manecklal was taken in his place.
The appellant is a firm which in 1948 companysisted of four partners namely Manecklal Purushotham, Liladhar Narayanjee, Jayanand Nagjee and Prabhulal Naranji.
1 shall have 3 annas 8 pies in the Rupee Partner No.
In the deed of 1918, it was stated that this firm carried on business in Calicut, having branches at Madras and Bombay and though Manecklal was included as a new partner, the firm was to carry on and companytinue the existing partnership business under the same name and style.
275 276 of 1963.
4 Hemchand Virjee Sait according to the directions of Partners 1 to 3 and the said Hemchand Virjee Sait is to manage work and assist the business of the firm and he shall be called hereinafter the Workinh Partner The working Partner Hemchand Virjee Sait may draw on the First of each month the monthly sum of Rs.
Appeals by special leave from the judgment and order dated May 2, 1960 of the Kerala High Court in Income tax Referred case No.
In Cl the preamble was as follows Whereas Partners 1 to 4 have been carrying on a business as Partners from the beginning of Samvat 1994 Guzarathi Era in the manufacture and sale of Soaps under the name of The Vegetable Soap Works Proprietors Sait Nagjee Purushotham Co., and in the manufacture and sale of Umbrellas in Calicut with branches at Madras and Bombay under the name and style of Sait Nagjee Purushotham Co., Soap and Umbrella Merchants at Calicut and Madras and in the name of Sha Nagjee Purushotham Co. at Bombay hereinafter called the Firm.
On October 30, 1943, a fresh deed of partnership was executed by Narayanjee and Manecklal who were companytinuing as partners from 1918 and two other members of the family namely Liladhar and Prabhulal and to the benefits of partnership Jayanand Nagjee who was a minor, was admitted.
The preamble was as follows . .
Both deeds provided again that the partnerships would number be dissolved by the death or retirement of a partner.
In that year, five members of a family by name Purushotham, Nagjee, Narayanjee, Krishnajee and Premchand along 1 20 I.T.R. 238.
The Tribunal duly drew up a statement of case and referred the question along with it to the High Court.
In C2, the preamble was Whereas the remaining partners 1 Nagjee Amersee Sait, 2 Narayanji Purushotham Sait and 3 Manecklal Purushotham Sait settled the claims in full of the partners who ceased to exist and agreed to carry on and companytinue and are companytinuing the existing partnership business under the name and style of Sait Nagjee Purushotham Co. Bankers, Piece goods and Yarn Merchants, hereinafter called the FIRM The relevant terms were The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and companyditions of the revoked deed shall number in future apply to the Firm except such as have been repeated in this Deed.
Sometime in the year 1932 or thereabout, the firm had started the manufacture and sale of soaps under the name of The Vegetable Soap Works Proprietors Sait Nagjee Purushotham Co. and perhaps the manufacture and sale of umbrellas in Calicut with branches at Madras and Bombay under the name and style, at Calicut and Madras, of Sait Nagjee Purushotham Co. Soap and Umbrella Merchants, and at Bombay of Sha Nagjee Purushotham Co It may be pointed out that the words Sha and Sait mean the same thing, and the names were number different.
In 1937, one Hemchand a stranger to the family was admitted as a working partner.
The agreement provided that the withdrawal of a partner for whatever reason, would number dissolve the partnership as between the remaining partners.
When the deed of 1934 was entered into, the de Id of 1918 was number revoked but only amended it was, however, provided that the principal deed of partnership to wit of 1918 would remain in force in so far as it was number inconsistent.
It was, however, provided that the withdrawal or death of a partner would number cause a dissolution of the partnership.
Its head office was at Calicut but it had branches at Bombay and Madras.
On May 30, 1939, two deeds were executed.
Thereafter on April 27, 1934 Purusbotham died and the firm was then left with three partners, namely, Nagjee, Narayanjee and Maneklal.
The partners of the firm are 1 Narayanjee Purushotham Sait, 2 Manecklal Purshotham Sait, 3 Jayanand Nagjee Sait Minor represented by guardian Manecklal Purushotham Sait 4 Leeladhar Narayanjee Sait and 5 Prabhulal Narayanjee Sait.
On taking the accounts if it is found that the Finn has in curred a loss the aggregate of the monthly sums drawn by the Working Partner shall at once be refunded by the Working Partner to the Firm along with his share of the loss.
It is hereby agreed that the working Partner should invest a sum of Rs.
The appellant then moved the Tribunal to refer a, certain question to the High Court at Madras under s. 66 1 of the Act but that application was rejected.
134 159 S.C. 8.
The Firm shall companytinue to do business in the manufacture and sale of soaps under the name of the Vegetable Soap Works and in umbrellas under the name of Sait Nagjee Purushotham Co. Soap and Umbrella Merchants as aforesaid with I lead Office at Calicut and branch at Madras under the same name and branch at Bombay under the name of Sha Nagjee Purushotham Co. The business of the Firm shall be carried on by Partner No.
It was carrying on business mainly in piece goods, yarn, banking and manufacture and sale of umbrellas and soaps.
Of these persons the last named was an outsider and the rest were members of a family.
400 only from out of the Firms account on account of the share of his profits for the current year, but if on taking the annual account it shall appear that the monthly sums drawn out by him exceed his share of profits he shall forthwith refund the excess.
All the partners hereby agree that they in their individual capacity are and shall be Partners also along with Hemchand Veerji Sait in a Partnership business in Soaps and Umbrellas carried on in Calicut and Madras under the name and style of Sait Nagjee Purushotham Co., Soap and Umbrella Merchants and in Bombay under the name and style of Shah, Nagjee Purushotham Co. the terms and companyditions whereof are embodied in an Agreement of Partnership dated 30 5 1939 signed by all the Partners.
4 Hemchand Veerjee Sait has decided to retire from the said partnership, business as from 31 10 1943 And whereas the remaining partners are willing and have agreed to take as new partners Leeladhar Narayanjee Sait and Prabhulal Narayanjee Sal , sons of Narayanjee Purushotham Sait as from 31 10 1943.
C2 was executed by Nagjee, Narayanjee and Manecklal.
N. Rajagopal Sastri and R. N. Sachthey, for the res pondent in both the appeals .
4 shall have 5 annas in the Rupee.
CIVIL APPELLATE JURISDICTION Civil Appeals, Nos.
They are respectively marked C1 and C2.
Nagjee died in August 1943 and Hemchand retired on October 31, 1943.
And whereas the remaining partners along with the new partners number included in the Deed of Partnership, have agreed to carry on and company tinue as one, single partnership business, the existing partnership businesses of Sait Nagjee Purushotham Co., Bankers, Piece goods and Yarn merchants, Sait Nagjee Purushotham Co. Soap and Umbrella merchants.
For practical purposes the firm can be treated as having been companystituted by this document of December 6, 1918.
T. Desai, C. V. Mahalingam, B. Parthasarathi and J. B. Dadachanji, for the appellant in both the appeals .
15,000 as deposit in the Firm of Sait Nagjee Purushotham Co., Bankers, Piece goods and Yarn Merchants, Calicut and such money shall remain in deposit as long as he remains a Partner and such amount shall carry interest at such rates of interest as the Firm of Sait Nagjee Purushotham Co., Bankers, Piecegoods and Yarn Merchants may agree from time to time.
And whereas it is thought advisable and prudent to reduce into writing the terms and companyditions agreed upon orally by them the partners agree and have agreed to the following terms and companyditions stipulated hereunder The operative terms relevant to our purposes were the following The Agreements of Partnerships dated 30th May 1939 entered into by 1 Nagjee Amersee Sait, Narayanjee Purushotham Sait 3 Maneck lal Purushotham Sait and 1 Nagjee Amersee Sait Narayanji Purushotham Sait 3 Manecklal Purushotham Sait and 4 Hemchand Veerji Sait and registered as 98 and 97 in the Joint 11 Sub Registrars Office, Calicut respectively, are hereby revoked and the affairs of the firm shall be regulated and governed by the regulations agreed upon orally and reduced into writing in this deed of Partnership and the terms and companyditions of the revo ked Deed shall number in future apply to the Firm except such as have been repeated in this Deed.
It then moved the High Court under s. 66 2 of the Act and the High Court directed the Tribunal to refer the following question for determination by it Whether, on the facts and in the circumstances of the case, the assessee is number entitled to relief under section 25 4 of the Indian Income tax Act, and to what extent?
We have on the record the partnership deed of December 6, 1918 by which the shares of the partners were adjusted after the retirement of Premchand and the admission of Manecklal and a deed of Januarv 1, 1934 after the death of Krishnajee and retirement of Bhagwanjee.
Cl was executed by Nagjee, Narayanjee, Manecklal and Hemchand.
The partnership agreement of December 6, 1918 was between the following six persons, Purushotham, Nagjee, Narayanjee, Krishnajee, Maneklal and Bhagwanjee.
There were really two references as there were two cases before the Tribunal.
The Profits and Losses shall be divided and apportioned in the following proportion Partner No.
The firm name shall be Sait Nagjee Purushotham Co. Bankers, Piece goods, Yarn, Soap and Umbrella merchants.
In that year, the firm companysisted of Nagjee, Narayanjee and Manecklal who were members of the original family.
The question in these appeals is whether on the facts to be presently stated, the appellant was entitled to relief under s. 25 4 of the Income tax Act, 1922.
In 1933 and 1934, two members Krishnajee and Purushotham died and Bhagwanjee retired.
The Judgment of A. K. Sarkar and J. C. Shah, JJ.
98 of 1955 M .
And whereas partner No.
was delivered by Sarkar, J. M. Hidayatullah, J. delivered a Dissenting opinion.
The terms relevant to our purpose were The Firm shall companytinue to be as of old namely Sait Nagjee Purushotham Co. Soap and Umbrella Merchants.
December 20, 1963.
By the deed of 1918, the earlier partnership deed of April 4, 1902 was revoked and the affairs of the firm were to be regulated by the new deed.
1947 or February 13, 1948, by an instrument executed on February 7, 1948.
The history of the firm goes back to the year 1902.
3 shall have 3 annas 8 pies in the Rupee and Partner No.
The appellant claimed relief under s. 25 4 companytending that it had transferred its business to a limited companypany with effect either from November 13.
On January 2, 1934, the remaining four partners executed an instrument varying some of the terms of the agreement of December 6, 1918.
The answer to the question depends on a whether the business on which tax was paid under the provisions of the Indian Income tax Act, 1918 had discontinued at any time before 1948 or b whether there was a succession by another person for the person who was carrying on business on April 1, 1939.
SARKAR J. These two appeals arise out of assessments of the appellant to income tax for the years 1948 49 and 1949 50.
The Agreement of Partnership dated the 6th day of December 1918 is hereby revoked and the affairs of the Firm shall be regulated and governed by the Regulations agreed upon orally and reduced into writing in this Deed and the terms and companyditions of the revoked deed shall number in future apply to the Firm except such as have been repeated in this Deed.
Krishnajee died in 1933 and Bhagwanjee retired about that time.
The claim was rejected by the Income tax Officer and by the Appellate Assistant Commissioner and also by the Income tax Appellate Tribunal on appeal to it.
with one stranger Bhagwanjee started the appellant firm Sait Nagjee Purushottam Co. Thereafter, there were changes in the companystitution of the firm caused by the death or by the retirement of partners.
2 shall have 3 annas 8 pies in the Rupee Partner No.
Then we get two instruments both dated May 30, 1939, each described as an agreement of partnership.
The facts have been set out in detail by my learned brother and I shall companytent myself with repeating only such facts as are necessary for the elucidation of my point of view.
