1986 (10) TMI 90

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....rjuna Rao retired from the firm. According to this deed, the assets and liabilities would be taken over by the continuing partners. The retiring partners would be given their share of profit for the accounting year concerned till the date of dissolution by calculating the net profit at 1-1/2 per cent of the turnover of that period. This is to be paid within 15 days after the finalisation of the accounts. 4. On 24th Dec., 1981, another partner was inducted. A new partnership deed was executed. This partnership deed stated in the preamble that Apparao and Mallikharjunarao who are partners had retired from the partnership deed with retrospective effect as from 1st April, 1981 and the new partner was being taken in. cl. 3 of this deed stated....

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....re us. After having heard the parties, we are of opinion that the assessee is entitled to registration. Both the ITO and the AAC have accepted that a genuine firm was in existence till 30th Nov., 1981. The question is whether the new partnership deed has to be accepted as a valid partnership deed so that the firm is entitled to registration throughout the year. In substance, the only reason given for treating the latter firm as invalid is inconsistency as to the date of retirement of the two partners. The dissolution deed clearly mentions the date as 30th Nov., 1981. The partnership upto this period is accepted as genuine and valid. The Department has not doubted the correctness of the narration in the dissolution deed. Therefore, factually....

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....in the above firm with retrospective effect as and from 1st April, 1981; subject to cl. No. 10 of this Deed." The above extract from the preamble narrated what had happened earlier. That narration is clearly wrong. It is wrong because the dissolution deed does not say that they have relinquished their interest retrospectively from 1st April, 1981. The preamble of the dissolution deed stated as follows: "Whereas the parties on mutual consent have agreed that the partnership should be dissolved, the partnership w.e.f. 1st Dec., 1981 as per the terms and conditions set forth hereunder, it is hereby agreed, laid down, and witnesseth as under: 1. The firm of M/s Sri Srinivasa Medical Agencies Ongole stood dissolved w.e.f. 1st Dec., 1981....