TaxTMI 
TaxTMI 
1997 (3) TMI 7
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....on in writing between them. On February 9, 1970, Sudevan, one of the partners, died. Sudevan had executed a will on January 28, 1970, by which his properties devolved upon his three adult sons, K. S. Krishnadas, K. S. Haridas and K. S. Bhagavandas. On February 20, 1970, a fresh partnership deed was executed. The partners were : 1. K. S. Krishnadas (No. 2 above--also heir under the will), 2. K. A. Jayapalan (No. 3 above), 3. K. S. Haridas (No. 4 above--also heir under the will), 4. K. A. Mohandas (No. 5 above), 5. K. A. Haridas (No. 6 above), 6. K. S. Krishnadas (No. 2 above but described in the partnership as Krishnadas representing the heirs of the late Shri K. K. Sudevan as per the registered will No. 10 of 1970 and being the attorney of the heirs hereinafter called the six partners). All these six partners had signed the partnership deed. K. S. Krishnadas signed it twice, in his individual capacity and also in his representative capacity. The Income-tax Officer initially granted registration to the newly constituted partnership firm for the assessment year 1971-72 (accounting year ending on June 30, 1970). But for the assessment year 1972-73 (accoun....
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....ay be admitted to the new partnership by the surviving partners. The only question in such a case will be whether any share of profit received by him qua partner belongs to him personally or to the estate which he represents. The answer will inevitably depend on the facts and circumstances of the case. However, there can be no legal bar to a legal representative of the deceased partner being admitted to the partnership by the surviving partners. If the legal representative of the deceased is also one of the surviving partners, he can agree to join the new partnership as a nominee of the legal heirs of the deceased partner. The only difficulty that is being pointed out in this case is that the executor, Krishnadas, who was one of the surviving partners of the erstwhile partnership, has joined the new partnership individually and also as representative of the deceased Sudevan. This would have created a problem, had there been any conflict of interest of Krishnadas as an individual and as a representative of the legal heirs of Sudevan. But that is not the case here. The properties of Sudevan under his will passed on to his three sons all of whom were adults. Out of the three son....
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....ther members of their family which was partitioned. Subba Rao J. observed : " A contract of partnership has no concern with the obligation of the partner to others in respect of their shares of profit in the partnership. It only regulates the rights and liabilities of the partners. A partner may be the karta of a joint Hindu family ; he may be a trustee ; he may enter into a sub-partnership with others ; he may, under an agreement, express or implied, be the representative of a group of persons ; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership, he functions in his personal capacity ; qua the third parties, in his representative capacity. The third parties whom one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner-representative in accordance with law or in accordance with the terms of agreement, as the case may be. " We were referred to a large number of cases relating to the problem of genuineness of a partnership firm. In the case of Hoosen Kasam Dada (A firm)....
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.... fact enter into a contractual relation with the stranger : the partnership will be governed by the Act.' " It was observed in that case : " ...it appears to me that the partnership which was sought to be entered into on the 24th of February, 1936, was between Lokenath on the one hand and Lokenath on the other as the managing member of the joint Hindu family with the result that in this case the family as a unit did not become a partner ; in other words that the partnership could be only treated to be in fact between the member of the joint Hindu family and the karta as the other contracting party which in this case is the same person. The result inevitably follows that there is no partnership in law which could have been registered by the Income-tax Officer. The case before us is not of a partnership between the karta of a Hindu undivided family with himself in another capacity. The case of Agarwal and Co. v. CIT [1970] 77 ITR 10 (SC) dealt with a partnership where the two kartas of the two Hindu undivided families had formed a partnership. The question was because the capital of the firm came out of the family funds, whether the members of the family ipso facto became....