Law:

Section:

Section 185 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - Whether it is open to authorities to refuse to register a partnership deed if there is no partnership in law and even if there is a partnership in law, if that partnership is not a genuine partnership - Held, yes - One M and his two sons had executed a document of partnership whereby M had been given right to exclude either or both of his sons from management of firm wholly or in part, or to entrust it to any other person - Even with regard to sharing of profits it was left to M to determine quantum of profits to be distributed and what was to be done with remaining profits - Whether no genuine partnership was constituted under partnership deed in question which could be registered under section 26A of 1922 Act - Held, yes FACTS The father M and his two sons had executed a deed of partnership whereby the father had been given the right to exclude either or both the sons from the management of the firm wholly or in part, or to entrust the management to any other persons. Even with regard to the sharing of profits it was left to the father to determine what quantum of profits should be distributed and it was also left to him after such distribution what should be done with the remaining profits. The income-tax authorities refused registration of said partnership deed. On second appeal, the Tribunal confirmed the view taken by the authorities. On reference : HELD It is open to the authorities to refuse to register a partnership deed, if there is no partnership in law and even if there is a partnership in law if the partnership is not a genuine partnership. There are two essential conditions before it can be stated that by contract a relationship has been brought about between persons which is the relationship of a partnership; and the two conditions are that the partners must agree to share the profits of the business and the business must be carried on by all or any of them for all of them. Therefore, not only must there be a sharing of profits but there must be also the principle of agency. In the instant case, on a true…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492