AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1958 (11) TMI 6
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....as an individual; but for the assessment year 1952-53 he claimed a change of status and pleaded that he and his brother had agreed to become partners under a partnership deed (exhibit 12) and asked for the registration of the said firm under section 26 of the Coorg Agricultural Income-tax Act (1 of 1951). According to the appellant the partnership in question had been constituted for the purposes inter alia of the joint working of the said estate as also for transacting generally the business or businesses of coffee, citrus and pepper and other businesses as specified in the document. The relevant provisions of the Coorg Act correspond to the provisions of the Indian Income-tax Act; section 26 of the said Act provides for the registration o....
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....lant's estate was being managed by his brother as his agent ; and this was on the basis of principal and agent or master and servant. In the assessment proceedings under the Coorg Agricultural Income-tax Act for the year 1951-52, P. W. Davis appeared as the agent of the appellant. Similarly, for the assessment year 1952-53 a claim for change of status was made by P. W. Davis who produced the partnership deed. That is why the question which the tax authorities considered was whether the execution of the document really brought about any change in the relationship between the two brothers. They held that despite the document the relations between the two brothers continued the same as before and the High Court has agreed with this view. This ....
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.... other manner, deal with, that estate. It has been provided that on dissolution, the capital, that is, the estate, would go back to the appellant. This would indicate that it was not intended that the appellant's brother would have any interest in the estate, and the use of the word "capital" is not, in our opinion, enough on the facts of this case to create an interest in the estate in the appellant's brother. Then again the document provides that the appellant's brother would employ himself diligently in carrying on the business. No provision has been made whether the appellant himself would be bound to do any work for the firm, and it would appear that the intention was that he was free to work or not to work, as he liked. This would ind....
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....g in thinking that the appellant's brother was entitled to his remuneration whether there was profit or not. But as stated in section 6 of the Act earlier mentioned, the sharing of profits or the provision for payment of remuneration contingent upon the making of profits or varying with the profits, does not itself create a partnership. It is possible to provide for remuneration of a servant contingent upon the making of and varying with profits. Then again the instrument makes no provision as to how losses are to be dealt with, and the complicated manner in which the profits are to be shared under its terms would seem to make it impossible for the losses to be shared in the same manner. If it was intended to create a real partnership, one ....
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....was difficult to accept the idea that they may have become the partners in law. Even so, on the construction of the relevant clauses of the document, the court upheld the assessee's plea. Similarly, in Raghunandan Nanu Kothare v. Hormasjee Bezonjee Bamjee, after construing an agreement of partnership between two solicitors the High Court reversed the trial court's finding that the defendant was not a partner but was an agent of the plaintiff, and came to the conclusion that the agreement made the defendant a partner of the plaintiff. Under this agreement, in lieu of his share of profits the defendant was entitled to receive Rs. 500 per month and was not to be responsible for any losses or liabilities of the firm. The main reason which appea....