TaxTMI 
TaxTMI 
1989 (6) TMI 90
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....nendra Kumar Jain is a partner in a firm M/s Kishan Flour Mills,Meerut, which owns an industrial undertaking. By an agreement dated29-6-1977executed between the assessee, the said Jenendra Kumar Jain and S/Shri Ashok Kumar Jain and Sharad Kumar Jain, who are the wife and sons of late Shri Sumat Prasad Jain, a partnership was created in the name and style of M/s Sumat Prasad Jain & Co. By this agreement it was stated that the said Jenendra Kumar Jain has been authorised to enter into partnership in the firm M/s Kishan Flour Mills and he shall be liable to account for all the profits and gains arising to him in the said firm and such profits shall be deemed to be the profits and gains arising to the firm M/s Sumat Prasad Jain & Co. It was fur....
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.... to a partnership firm, M/s Kishan Flour Mills, of which the assessee is admittedly not a partner. The assessee is a partner of another partnership firm styled as M/s Sumat Prasad Jain & Co., constituted by the assessee and her three sons, one of whom, namely, Jenendra Kumar Jain is a partner in the said Kishan Flour Mills. As per deed of partnership of M/s Sumat Prasad Jain & Co., Shri Jenendra Kumar Jain is a partner in Kishan Flour Mills as a representative of the persons constituting M/s Sumat Prasad Jain & Co. Exemption under sec. 5(1)(xxxii) of the Wealth-tax Act is available to a person in respect of the value of the interest of the assessee in the assets forming part of an industrial undertaking belonging to a firm or an Association....
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.....) and CIT v. Alisher Contractors [1986] 159 ITR 534 (Raj.). All these rulings are off the point and in none of them it has been held that the partners of a sub-partnership automatically become the partners of the main partnership firm. What has been held is that in such cases the partner, who represents the sub-partnership in the main partnership is not the exclusive owner of the profits and the entire amount cannot be taxed in his hands. It has been held that a sub-partner has definite enforceable rights to claim a share in the profits accrued to or received by the partner in the original partnership. Reliance was also placed on CIT v. Sakina Bai Ibrahim & Sons [1985] 154 ITR 540 (Mad.), in which the following observations were made :-....
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....o which the industrial undertaking belongs. The industrial undertaking belongs to M/s Kishan Flour Mills and by no stretch of imagination it can be said that the present assessee is a partner of the firm, M/s Kishan Flour Mills. 8. In CIT v. Bagyalakshmi & Co. [1965] 55 ITR 660 (SC) a question arose, whether coparceners of Hindu undivided families, whose kartas were partners in a partnership firm could be said to be the partners of such firms. The Hon'ble Supreme Court held that the coparceners could not be the partners of the firm and it were only the Kartas, who, having entered into the contract of partnership, were the partners. The Hon'ble Supreme Court observed as under :-- "A contract of partnership has no concern with the oblig....