TaxTMI 
TaxTMI 
1966 (12) TMI 72
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....ument was to consist of five partners, namely : (1)H. Mohamed Khan, (2)Mohurunnisa Begum, (3)N. Mohamed Khan, (4)H. Gaffar Khan, (5)Mirza Habibulla Baig. Out of these, number 2 is the wife of number one, and number 3, the son of number one. Numbers 4 and 5 were employees under number one. The capital was to be contributed only by the first two in the sum of Rs. 6,00,000 by the former and R. 55,500 by the latter. The assessing authority, the Income-tax Officer, refused registration. In the personal assessment of H. Mohamed Khan, he also held that the sum of Rs. 55,500 shown as capital contribution by the wife was in fact not her money, but a contribution by the husband himself. Upon Appeal, the Appellate Assistant Com....
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.... a statement of the case, the following question of law : "Whether, on the facts and in the circumstances of the case, the Tribunal was right on the material before it in holding that the firm constituted under the partnership deed dated March 12, 1951, is not a genuine firm?" The present reference is one made pursuant to that direction. The Tribunal gave two principal reasons in support of its conclusion : ( i) that the finding accepted by the first two authorities that what appeared to be capital contributed by the wife was really the contribution by the husband, was sufficient to make out that the wife did not acquire the status of a partner ; (ii) that the overriding powers given to the first two partners in clauses (2) a....
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....ssets only to the extent of any unpaid credit of their share of profit in the accounts. It is open to the first and second partners to take in more partners and to change the share of the profit of the working partners as agreed to herein......... (4) The business of the partnership shall be managed by H. Gaffar Khan, the working partner of the fourth part, with the assistance of the working partners of the third and fifth parts, and in his absence by N. Mohamed Khan, the working partner of the third part, under the supervision of the first and second partners." Regarding the fourth clause, the Tribunal itself does not seem to think that it would necessarily make any difference to the situation, because immediately after quoting....
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....rejected by the Supreme Court in the case cited above. Even otherwise, if there is nothing out of the way-and it is in fact not uncommon-to provide for special considerations in favour of a capitalist or a financing partner in protection of his financial or proprietary interest, it should make no difference whether there is only one such partner or more partners than one in a partnership. The power given to the financing partners to introduce new partners may also, in one sense, be related to the same idea of protecting their financial and proprietary interests. What is of real importance is not the positive power given to the first two partners to introduce new partners, but the implied deprivation of a similar right in the other three ....