1978 (7) TMI 10

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.... two sons, Sardar Sant Singh and Sardar Manmohan Singh. The family carried on business in the name of Sardar Ude Singh and Sons. A partition took place in the family on 1st July, 1959. In this partition, the business carried on in the name and style of Sardar Ude Singh and Sons at Junnardeo came to the share of Sant Singh. The total assets of the business were determined at Rs. 79,432. After excluding ornaments of Rs. 1,700 and life insurance premium of Rs. 1,336, the balance figure of assets came to Rs. 76,396 out of which a sum of Rs. 76,185 was introduced as capital in the business. The business name of Sardar Ude Singh and Sons was continued. A partnership deed was executed on 9th July, 1959, to be effective from 5th July, 1959. In thi....

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....ere 30 per cent. each in profits and 40 per cent. each in losses. Kuldip Singh was allotted a share of 15 per cent. in profits and 20 per cent. in losses. Daljit Singh and Azad Singh got 10 per cent. and 15 per cent. share in profits, respectively. The capital of the partnership was to remain the same as standing in the books of account. The amount that stood in the books of account in the capital account was Rs. 76,185, the same figure as appeared in the earlier years. This partnership remained in existence till 31st March, 1965. A third partnership deed was executed on 1st April, 1965. Daljit Singh withdrew from the partnership. Azad Singh by that time had become major. In accordance with this partnership, Sant Singh, Santosh Singh, Kuld....

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....978] 112 ITR 750, 753 (SC) ]. There is no evidence either of partition of the business or of the capital assets invested in it between Sant Singh and his sons till 1st April, 1964. The so-called partnership business which was carried on under the three partnership deeds was the same business which came to Sant Singh in the partition of the HUF property. The sum of Rs. 76,185 which was shown to be invested as capital in the partnership business was the capital value of the business received in partition by Sant Singh and constituted coparcenary property of Sant Singh and his sons. In the absence of any partial partition amongst Sant Singh and his family members with reference to the business or the capital assets, the partnership business in....

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....hat a partnership is not invalid merely because two or more of its partners are members of an HUF and represent the interest of the family. The case is not an authority for the proposition that members of a joint Hindu family can enter into a partnership consisting of themselves in respect of a joint family asset without partitioning it. Further, it also does not militate against the view taken in Firm Bhagat Ram Mohanlal's case [1956] 29 ITR 521 (SC) that " it is difficult to visualize the situation of a joint Hindu family entering into a partnership with strangers through its karta and the junior members of the family also at the same time becoming its partners in their Personal capacity ". All that is decided in the case of Sri Hukumchan....