1980 PLP 347 (PTD)

do. do. 6 % Rs. Nil 1/6th Jawahar do. do. 6 % Rs. Nil 1/6th P. D. Mariwala 6 a/4 Sindhi Colony, Bombay‑22 5‑4‑57 6 % 1 /3rd in a rupee. Madhavii Khimji do. do. 6 % 1/6th Laxman Velji do. do. 6 % 1/6th Vishindas Lekhraj & Jawahar Lekhraj of M/s. Jay Vishin & Company. do. do. 6 % 1 /3rd These applications for registration of the assessee‑firm were accompanies by both the deeds of partnership respectively executed on April 15, 1957 and April 25, 1957. When the matter came up before the Income‑tax Officer he suggested that a supplementary deed should be made in order to make the position clear, to the effect that the deed dated April 5, 1957, was a deed of partnership between individual members of the firm, their shares being specifically mentioned therein. Accordingly, the assessee drew up a supplementary deed dated October 7, 1959, and the same was also filled before the Income‑tax Officer. The Income‑tax Officer took the view that there was no firm in existence as per the partnership deed executed on April 5, 1957, and declined to register the firm. On appeal by the assessee the Appellate Assistant Commissioner reversed the finding of the Income‑tax Officer. He pointed out that it was really the individual members who were partners of the firm and the present was not a case of a partnership between three individuals and a firm. According to him, the case was covered by the decision of this Court in the case of Chhotalal Devchand v. Commissioner of Income‑tax (1958) 34 I T R 351 (Bom.). He took the view that the firm of New Life Construction Company was duly constituted under a valid partnership deed and the shares of the partners were specified in the partnership deed. According to him, the Income‑tax Officer was, therefore, not justified in refusing registration of the firm for the assessment year 1958‑59 and not granting renewal for the assessment year 1959‑

60. He directed the Income‑tax Officer to grant registration to the firm for the first year and renewal for the second year. In an appeal by the revenue the Tribunal confirmed the finding of the Appellate Assistant Commissioner. The Tribunal in its order pointed out that though the preamble mentioned the firm of Jay Vishin & Co., as the fourth partner, the deed itself has been signed by the two partners of that firm. The share of the fourth partner has been mentioned in the deed as 1/3rd in a rupee but the deed in and by which the firm of Jay Vishin & Co., was itself constituted clearly mentioned that each partner took equal share and the said deed was filed along with the application for registration. Actually, the application for registration had to be considered in conjunction with the two deeds of partnership. In the application for registration for the year 1958‑59, the shares of all the partners individually were clearly mentioned and especially those of Vishindas Lekhraj and Jawahar Lekhraj, the two partners of Jay Vishin & Co., were shown as 1/6th each and the application for 1959‑60 showed these two partners and the combined share was shown as 1/3rd. According to the Tribunal this case was duly covered by the decision of this Court in Chhotalal Devchand v. Commissioner of Income‑tax. The above question arises from this order of the Tribunal. Mr. Joshi, on behalf of the revenue, contended that as in the preamble of the main deed of partnership dated April 5, 1957, the fourth partner was shown as Jay Vishin & Co., it was the firm that was a partner and if the partnership firm was constituted of three individual partners and a firm, then such firm was not entitled to registration. He has, however, fairly conceded before us that both in the order of the Tribunal as well as in the statement of the case it is clearly mentioned that the deed of partnership dated April 5, 1957, is signed by all the five partners including the two partners of Jay Vishin & Co. There is no controversy in the present case that the film that had sought registration and renewal for the two relevant years was a genuine firm and in fact it has been duly registered for the subsequent years. If the deed of partnership dated April 6, 1957, is signed by ail the five partners, as stated in the order of the Tribunal as well as the statement of the case, then merely because they are described as partners of the firm of Jay Vishin & CO., makes no difference. It is the five individuals woo have become partners and their shares are clearly specified and even the application for registration leaves no scope for doubt as regards the manner in which the parties considered themselves as partners. In the application form for the assessment year 1958‑59, the names and the specific shares of all the five partners are specified while in the renewal application for the subsequent years the shares of the two partners, Vishindas Lekhraj and Jawahar Lekhraj of Jay Vishin & Co. are specified. Thus, in our opinion, if it is the five individuals alto are tire partners in this firm and if their shares are clearly specified then it is ca genuine firm which is entitled to registration under the Act. The view that has been taken by the Tribunal as well as the Appellate Assistant Commissioner is fully supported by the decision of this Court in the case of Chhotalal Devchand v. Commissioner of Income‑tax. In this case by a partnership deed dated September 13, 1945, an agreement of partnership was arrived at between three parties, viz., two firms (one of four partners and the other of two) and an individual. The deed was signed by all the seven individuals. Capital was to be contributed equally by the three parties and the profit or loss was to be divided in equal shares by the three parties. The deed provided, inter alia, for arbitration between the individuals. In order to ascertain the shares of the seven individuals the partnership deeds of the two firms which were on the file of the Department were relied upon. There was a change in the constitution of the partnership by the death of one of the individuals, and a fresh partnership deed was executed on November 29, 1954, on the basis of which an application for registration under section 26‑A of the Income‑tax Act was made for the assessment year 1954‑

55. Registration was refused for that year on the grounds: (i) that it was not a valid partnership, as it was constituted of two firms and an individual. (ii) that in the books of account of the partnership the profits were credited not to the names of each constituent individual but only to the names of the firms, and (iii) that the deed of partnership did not specify, tire share of each of the individuals constituting the two firms. On a reference, this Court took the view that on the facts it was the constituent members of the two firms and not the two firms as entities that had entered into a partnership with the individual, and, therefore, the partnership so constituted was a valid partnership. The High Court further held that the fact that the profits were not credited to the individual accounts of the constituent members of the two firms but were credited to the accounts of tile two firms was immaterial; that as there were partnership deeds constituting the two firms and those deeds were on the file of the Department and or the ascertainment of shares of the constituent individuals of these firms they were relied upon, it was not necessary that the deed of partnership itself should have specified the shares of the individuals. It is further pointed out in this case that, where a partnership is constituted of a firm and an individual, the partnership deed instead of setting down the names of the in individual and the members of that firm may compendiously use the name of the firm by making it clear that what was intended was a partnership constituted between the individual and the constituent members of the firm and that such is the intention can be made clear if the partnership deed itself is signed not only in the name of the firm but by all the constituent members of that firm. The ratio of the decision clearly applies to the facts of the present case and both the Appellate Commissioner and the Tribunal were justified in relying upon the same for granting registration arid renewal of the firm. Though it appears from the order of the Tribunal that soiree High Courts might have taken a different view, so far as we are concerned we are bound by the decision of a Court of co‑ordinate jurisdiction unless our attention is drawn to a decision of the Supreme Court where a contrary view is taken. Mr. Joshi has not even informed us that the Supreme Court has taken a view contrary to the one taken by this Court in a Chhotalal Devchand's case. In that view of the matter, both having regard to the particular facts of this case as well as the decision oft his court in Chhotalal Devchand's case, the firm was rightly registered for the yea, 158`59 and its registration was rightly renewed in, the year 1959‑

60. In the result, our answer to the question referred to us is in the affirmative. The revenue shall pay the costs of the assessee. Question answered in the affirmative.