THACKER AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BETWEEN November 14, 1957, and March 27, 1960, one Jayantilal Thacker and Pravinchandra Thacker carried on business in the firm name and style of Thacker and Company. The business of the firm was in mill -gin stores and spare parts. On March 27, 1960, Pravinchandra Thacker retired from the said business. On March 28, 1960, Jayantilal entered into an agreement with his brother, Kantilal, to carry on the same business in partnership in the name and style of Thacker and Company, and the two brothers agreed to admit their minor brother, Dilipkumar, to the benefits of that partnership. On August 1, 1960, Jayantilal, Kantilal and the said minor, Dilipkumar, through his guardian, Lalji Thacker, entered into an agreement acknowledging thereby that a partition of the said former business of Thacker and Company had taken place on March 26, 1960, and that the amount standing in the account of Jayantilal in that business was distributed in three accounts, namely, Jayantilal Rs. 11,919, Kantilal Rs. 11,919 and Dilipkumar Rs. 23,839. The firm of Thacker and Company as constituted under the deed of partnership dated March 28, 1960, was registered under the Partnership Act with the Registrar of Firms on October 3, 1960. The sales tax authorities were also informed on April 5, 1960, about the formation of the firm and accounts in the name of the new firm were opened with the Bank of India and the State Bank of India.

(2.) THE deed of partnership dated March 28, 1960, recited that the parties had been carrying on business as partners since November 14, 1957, that the said Pravinchandra Thacker had retired from the said business on March 27, 1960, in accordance with the deed of dissolution dated March 27, 1960, and that the remaining partner, i.e., Jayantilal, had taken over from March 28, 1960, all rights, interest, title, assets and liabilities of the said business and desired to form a new partnership between himself and his brother, Kantilal Thacker. It also recited that is was agreed that the parties, i.e., Jayantilal and Kantilal, shall be the partners in the new firm and that they were to enter into an agreement upon the terms and conditions therein contained. Clause 1 of the deed provided that the first and the second party, i.e., Jayantilal and Kantilal, agreed to admit their minor brother, Dilipkumar, to the benefits of partnership. Clause 3 provided that the partnership was to be at will, and clause 5 set out the shares of profits as follows :

(3.) AGGRIEVED by this decision, the assessee -firm applied for reference under section 66(1) of the Act and, on that application, the following question has been referred to us :