COMMISSIONER OF WEALTH TAX Vs. ASHA V SARAF

JUDGEMENT

(1.) In these appeals arising under the Wealth Tax Act, 1957, and references under the Income Tax Act, the only common question of law raised for consideration is whether Section 13(b) of the Indian Partnership Act, 1932, could be invoked by the Revenue in the context of clause-7 of the Partnership Deed of the firm, M/s Saraf Trading Corporation.

(2.) On this issue we heard the learned Senior Counsel for the Revenue and the learned counsel appearing for the respective assessees.

(3.) Section 13(b) of the Indian Partnership Act, 1932, provides that subject to contract between the partners, the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm. In Mandyala Govindu & Co. v. C. I. T., 1976 102 ITR 1, the Apex Court held that Section 13(b) of the Indian Partnership Act, 1932, reproduces the provisions of the repealed Section 253(2) of the Indian Contract Act, 1872, and referred to the judgment in [1935] ILR 58 Mad. 25, 28, which explained the scope of Section 253(2), where it was held thus: