COMMISSIONER OF INCOME TAX Vs. PATEL BROTHERS

JUDGEMENT

(1.) THIS is a reference at the instance of the Revenue in which the question of law which has been referred to the High Court for opinion is as follows :

(2.) THE assessee, M/s. Patel Brothers, Bombay, is a partnership firm constituted under a partnership deed dated October 18,1949. Initially there were three partners who were brothers, viz., Sorab Pestonji Patel, Jehangir Pestonji Patel and Shavak Pestonji Patel. The partnership deed specifically provided that the death or retirement of any partner shall not dissolve the partnership and the partnership shall continue with the remaining partners.

(3.) THE effect of this clause is that the retirement of any of the partners does not dissolve the partnership as to the remaining partners. It provides that on the death of a partner the accounts shall be prepared by the auditors of the firm and on the amount payable to the legal representatives of the deceased or to the retiring partner being ascertained in the manner above mentioned, the whole of the partnership business and the assets, effects, outstandings and credits shall absolutely vest in and belong to the surviving partners or the continuing partners, as the case may be, for their own benefit. Clause 14 also provided that the audited balance -sheet and profit and loss account of the firm prepared by the auditors of the firm for the purposes of this clause shall be conclusive and binding on all the partners and the legal representatives of a deceased partner or the retiring partner shall be bound to accept as conclusive the balance -sheet and profit and loss account prepared by the firm's auditors and signed by the partner (deceased).