BENARES CLOTH DEALERS SYNDICATE Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) I agree with the answer proposed by my brother, Brijlal Gupta. There is no doubt whatsoever that the latter partnership, which is sought to be registered, is a partnership consisting of 3 individuals, 3 Hindu undivided families consisting of 4 adult coparceners and 6 firms consisting of 14 partners. The partnership deed was signed by the 3 individual, 3 kartas of Hindu undivided families and 6 persons acting as representatives or agents of the firms, that is, by 12 persons. From the recitals in the partnership deed itself it is clear that the kartas entered into the partnership not as individuals but as representatives of the Hindu undivided families and that the 6 partners entered into the partnership as representing the 6 firms, i.e., the partners of the partnership in dispute were 3 individuals, 3 Hindu undivided families and 6 firms.

(2.) A Hindu undivided family cannot be a partner; this proposition admits of no doubt. The Income-tax Act does not recognise a partnership of which a Hindu undivided family is a partner. A karta of a Hindu undivided family may be a partner, but, so far as the Partnership Act is concerned and the Income-tax Act is concerned, only he will deemed to be the partner and not the Hindu undivided family, nor its coparceners. Really he is a partner as an individual and, it is only by virtue of the Hindu law, that his partnership becomes a joint family property or his interest in the partnership is held to be that of the Hindu undivided family. A Hindu undivided family is not a juristic person and cannot be a partner. What has happened in this case is that 3 of the partners are not kartas as individuals but Hindu undivided families consisting of 4 adult coparceners. Instead of the 3 kartas being the partners, 4 adult coparceners are the partners.

(3.) ANOTHER defect in the deed of partnership and the registration application is that the individual shares of the partners are not specified. The share of each of the 21 partners ought to have been specified in both the documents. Specifying the share of a Hindu undivided family, or of a partnership, is not enough, because neither a Hindu undivided family nor a partnership can be, or is, a partner. The shares of the real partners ought to have been specified.