TaxTMI 
TaxTMI 
1942 (6) TMI 10
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.... Colonel J. L. Archer, the Hon'ble Mr. Justice Dewan Ram Lai and the late R. B. Binda Saran as trustees of his estate, and in clause 12 of the will he directed that " my trustees may carry on or join in carrying on for so long a period as they may think fit the trade or business now carried on by me in partnership with Lala Ishar Das of Pind Dadan Khan". Letters of administration were issued by the High Court in favour of the trustees on the 13th of July, 1939 (exhibit ' C '). No new agreement has been drawn up since the death of Mr. Bevan Petman, but the profits have been distributed between the surviving partner and the representatives of the estate in accordance with the old partnership deed. In previous years the business was assessed as a registered firm consisting of the two partners named in the deed. In connection with the assessment for 1939-40 two applications were submitted under Section 26-A, which are attached in original as exhibits D&E. Both of these applications were signed by R. S. L. Ishar Das and by the three trustees of the estate as " partners of the Makerwal Colliery The first application asked for fresh registration on this basis while the seco....
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....ip to which a reference is made in the application is the old instrument of partnership drawn up by the original partners. There is no instrument referring to the trustees as partners. This application therefore did not state the actual position and it was rightly rejected on that ground. (ii) The application for renewal is based on the assumption that the death of Mr. Bevan Petman had made no material difference to the position. Section 42 of the Partnership Act states that " subject to contract between the partners a firm is dissolved......by the death of a partner " ; and the assessee's contention is that the partnership has continued in accordance with the contract embodied in clause 19 of the partnership deed. But there can be no firm unless there are at least two existing partners. In the present case only one of the partners has survived, and he alone cannot be treated as a firm. Moreover, I do not think it is possible to regard either the estate itself or the trustees of the estate as being legally the same person as the late Mr. Bevan Petman. They are clearly different persons and they cannot, therefore, take the place of Mr. Bevan Petman as a partner in the absence....
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.... at page 19) for registration of the firm as a new firm under Section 26-A of the Indian Income-tax Act, 1922. In the alternative they applied for renewal of the registration of the firm under the same section. It was stated that the old firm consisting of Mr. Bevan Petman and Rai Sahib Ishar Das Kapur had been registered and that the original instrument of partnership was attached to the application which was signed by Rai Sahib Ishar Das Kapur and the three trustees. Similar statements were made in the alternative renewal application, in which the argument was that the trustees were the legal representatives of Mr. C. Bevan Petman and the firm was really the old firm which still continued. The Income-tax authorities, both Income-tax Officer and Assistant Commissioner, rejected both these applications and the Commissioner under Section 66(2) of the Income-tax Act referred the following question to the High Court whether the renewal of registration or fresh registration has rightly been refused. In the Commissioner's opinion both had been rightly refused because, in the opinion of the Commissioner there was no instrument of partnership referring to the new partnership created b....
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....on given to them by the terms of Mr. Bevan Petman's will but this is to misread the nature of the option conferred under clause (12) of the will. It is not an extra option. It is an obligation on the trustees that they must exercise their discretion before either adopting the partnership or adopting the term of the lease. If now the trustees in the exercise of these two discretions have as a matter of fact contended themselves with accepting the terms of the old agreement as well as the term of the old lease, it does not follow that they have thereby merely taken up the old contract of part- nership. On the contrary as I read it they have by definite act constitute a new partnership though it happens that the partnership has the same terms and existence for the same term as in the old partnership deed. From this point of view it becomes clear at once that there has been no renewal of the old firm both for the reasons given by the learned Commissioner and also by the simple fact that the application for renewal is not signed by all the partners in the deed constituting the partnership for naturally that deed is signed only by Mr. C. Bevan Petman and Rai Sahib Lala Ishar Das Kapu....