Law:

Section:

Schedule I, Article 25(b) - Bombay Stamp Act, 1958 CASES REFERRED TO Venkatachalapathi v. State AIR 1966 Mys. 323 [FB], Commissioner of Income-tax v. Dewas Cine Corporation [1968] 68 ITR 240[1968] 2 SCR 173 (SC) and Narayanappa v. Bhaskara Krishnappa AIR 1966 SC. 1300 JUDGMENT P.N. Bhagwati, CJ. - This is a reference made to us by the Chief Controlling Revenue Authority under section 54(1A) of the Bombay Stamp Act, 1958. The question which arises for consideration on the reference is as to what is the proper article of the Act under which a certain instrument executed between the partners of Messrs. Velo Industries is chargeable. To determine the question it is necessary to refer briefly to a few facts giving rise to the reference. Prior to Aso Vad Amas Samvat year 2021, ten persons carried on business in partnership in the firm name of Messrs. Velo Industries. There of them retired from the firm with effect from Aso Vad Amas Samvat year 2021 leaving the other seven as continuing partners of the firm. The terms and conditions of retirement were recorded in an instrument dated 24th October, 1963, executed by and between the partners and, since the entire controversy between the parties has turned on the true interpretation of this instrument, it would be desirable to set out some of its material provisions in extenso. They read, according to their English translation : " 1. We have retired from the firm of Messrs. Velo Industries with effect from Aso Vad Amas Samvat year 2021 and you have taken over the administration of the firm in its present condition together with all goods, debts, outstanding transactions, tenancy and leasehold rights, quotas, permits, liceaces, etc., as also goods, properties, reserve funds, tools, equipment, etc., and all liabilities of the firm and you are entitled to carry on the business in partnership between yourselves or by taking new partners. All rights and liabilities resulting from the administration of the business of the firm hereafter will now devolve upon you and your new administration. 2. It is agreed between us that the accounts including determination of profit of the present administration up to Aso Vad Amas Samvat year…

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