G S DUGAL AND CO PVT LTD Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The question in this reference whether the assessee-firm is entitled to registration and renewal of registration has boon very strenuously argued both on behalf of the assessee-firm as well as the revenue. The statement of the case relates to the assessment years 1952-53, 1953-54 and 1954-55. Under the instrument of partnership dated April 5, 1950, the assessee was purported to be constituted as a firm. The instrument of partnership showed that the partnership was to consist of three partners, namely, Messrs. G. S. Dugal & Co. Ltd., a firm by name, Messrs, Bishan Singh Jaswant Singh and as individual by name, S. Lakhinder Singh. The shares of M/s. G. S. Dugal & Co. Ltd. and the firm of Messrs. Bishan Singh Jaswant Singh were respectively 7 annas in a rupee and the share of the third partner, S. Lakhinder Singh, was 2 annas in a rupee. This instrument of partnership was signed on behalf of G. S. Dugal & Co. Ltd. by its managing director, G. S. Dugal, on behalf of the firm of M/s. Bishan Singh Jaswant Singh by its partner, Tej Singh, and by the third partner as an individual. In the books of account maintained by the assessee, 7 annas share of profit was credited to the account of Messrs. Bishan Singh Jaswant Singh for all the three assessment years and no credit was made in the names of the four individual partners of the firm of Messrs. Bishan Singh Jaswant Singh. In the returns of income filed by the assessee for all the assessment years under consideration the assessee-firm has stated that the firm of Messrs. Bishan Singh Jaswant Singh was one of the partners of the assessee with 7 annas share in the profits and losses.

(2.) On May 10, 1950, a declaration was signed in the matter of partnership agreement dated April 5, 1950, whereby the individual partners' of the firm of Messrs. Bishan Singh Jaswant Singh declared their individual shares in the assessee-partuership as being equal in proportion, i.e., one anna nine pies each. The declaration was signed by the four individual partners of the firm of Messrs. Bishan Singh Jaswant Singli and was attested by two witnesses. Below the signatures of the witnesses, under the remark "noted", it was signed by S. Lakhinder Singh and by Messrs. G. S. Dugal & Co. Ltd. by its managing director.

(3.) On August 22, 1951, the instrument of partnership was executed by the four partners of the firm of Messrs. Bishan Singh Jaswant Singh. The recitals and the operative part of this partnership deed provided that it merely related to the distribution of the seven annas share of profits arising to the firm of Messrs. Bishan Singh Jaswant Singh in the assessee and how the profits and losses thereunder were to be distributed amongst the four individual partners thereof. It, inter alia, provided that the goodwill in the trade name of M/s. Bishan Singh Jaswant Singh exclusively belonged to one of the partners, namely, Jaswant Singh Dugal. The firm of Messrs. Bishan Singh Jaswant Singh applied for registration and was granted registration and renewal of registration for the assessment years 1952-53, 1953-54 and 1954-55.