Lakshminarayan case partnership act

An application made by the appellants under section 48 2 for statement of the case to the High Court was rejected by the Commissioner and the appellants filed a petition to the High Court under section 48 3 to compel the Commissioner to state the case to the High Court.

An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor. The fifth party M. Thus in keeping accounts, merchants habitually show a firm as a debtor to each partner for what he brings into the common stock and each partner is shown as a debtor to the firm for all that he takes out of that stock.

A notice was issued under section 13 of the Hyderabad Excess Profits Tax Regulation by the Excess Profits Tax Officer calling upon the appellants to pay Lakshminarayan case partnership act, amount of tax appertaining to these chargeable account-ing periods. These powers did not spell a direct control and supervision of the Directors as of a master over his servant but constituted the appellants the agents of the Company who were to exercise their authority subject to the control and supervision of the Directors but were not Lakshminarayan case partnership act in such exercise to the direct control or supervision of the principals.

We have, therefore, to go to the last mentioned Act to ascertain what a firm is and how it can be created. Commissioner of Income-tax, Madhya Pradesh 2 to which a reference has already been made. The principal questions which were therefore argued before the High Court at Hyderabad and before us were the questions 2 and 3 which involved the determination of the position of the appellants whether they were servants or agents of the Mills Company and the determination of the character of their remuneration whether it was wages or salary or income, profits or gains from business.

An ament, though bound to exercise his authority in accordance with all lawful instructiOns which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.

That contention was however negatived and it was held that even though what was to be looked at was the character of the work done by the company, it was not carrying on the profession of the naval architects within the meaning of the section, because for that purpose it was of the essence of a profession that the profits should be dependent mainly upon the personal qualifications of the person by whom it was carried on and that could only bean individual.

In this view of the matter there can arise no question of registration of a partnership purporting to be one between three firms, a Hindu undivided family business and an individual as a firm under section A of the Act.

Clauses 3 and Lakshminarayan case partnership act of the agency agreement are important and may be set out in extenso: The work which the appellants did under the terms of the Agency Agreement constituted neither trade, commerce or manufacture or any adventure: The creditors of the firm are, in the first place, paid out of the partnership assets and if there is any surplus then the share of each partner in such surplus is applied in payment of his separate debts, if any, or paid to him.

On appeal the Appellate Assistant Commissioner held that when a firm entered into a partnership with another firm the result in law was that all the partners of each of the smaller firms became partners of the bigger firm and, therefore, there was no legal flaw in the constitution of the bigger firm of Dulichand Laxminarayan.

Is there, however, anything repugnant in the subject of partnership law, which will exclude the application of that definition to section 4?

A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.

Accordingly on the 12th June the Tribunal directed registration of the firm. It was common ground that out of the five constituent parties, D. Four questions were referred by the Commissioner to the High Courts as under: The contention which was urged before us that the appellants only worked as the agents of the Mills Company and no others and therefore what they did did not constitute a business does not avail the appellants.

They may even consist of rendering services to others which services may be of a variegated character. English Lawyers do not recognize a firm as an entity, distinct from the members composing it.

Kapur and Ganpat Rai, with him for the appellant. Beharilal for Jairam Das Hiralal.

According to section 5 of the Indian Companies Act any seven or more persons or, where the company to be formed will be a private company, any two or more persons associated for any lawful purpose may by subscribing their names to a memorandum of association S R Das Bench: The Korean Syndicate Limited 2: It is in this view of the matter that it has been consistently held in this country that a firm as such is not entitled to enter into partnership with another firm or individuals.

The first question that arises is as to whether a firm as such can enter into an agreement with another firm or individual.

A perusal of the deed and par- ticularly the portions hereinbefore set out indicate beyond any doubt that the intention of the parties quite clearly was that each of the three constituent firms and not the particular member of each of the said three firms who had signed the deed for his respective firm was to be the partner in the bigger firm constituted under this deed.

It is clear from the foregoing discussion that the law, English as well as Indian, has, for some specific purposes, some of which are referred to above, relaxed its rigid notions and extended a limited per,personality of a firm.

Section 2 6-B of the Act clearly provides, inter alia, that "firm" and "partnership" have the same meaning respectively as they have in the Indian Partnership Act These questions were of considerable importance and were referred for decision to the Full Bench of the High Court. The liberty given to the appellants under clause 4 of the Agency Agreement to deal with the Company by way of sale and purchase of commodities therein mentioned also did not spell a relation as between master and servant but empowered the appellants to deal with the Company as Principals in spite of the fact that under clause 8 of the Agreement two of their members for the time being were to be the ex-officio Directors of the Company.

In other words merchants are used to regard a firm, for purposes of business, as having a separate and independent existence apart from its partners.

The signatures of five per- sons were appended on behalf of five parties respectively at the foot of the deed. The work done by the company was identical in all respects with the work of a professional naval architect and consulting engineer, and was performed by the said three shareholders and directors of the company personally.

The definitions given in section 3 of the General Clauses Act,however, apply when there is nothing repugnant in the subject or context. The argument is that applying that definition to the word "persons" occurring in section 4one can at once say that an unincorporated association or body of persons, like a firm, can enter into a partnership just as by the application of that definition to section 4 of the Indian Partnership Act a company can become a partner in a firm.

Daphtary, Solicitor-General of India G. On appeal to the Supreme Court: It is said that each of the three persons who executed the deed for the three smaller firms must be regarded as having the authority of their co-partners in their respective firms to sign the application for registration just as they had their authority to execute the deed itself for them.A casebook with selected cases to aid the teaching of partnership law.

First edition. Missing front matter. Problems Caused by Partnership Act Introduction. It is also true that application of the Act is now accompanied by bulk of case laws and it should be high time to codify these decisions into the law.

This was further indirectly emphasized in the case of DULICHAND LAKSHMINARAYAN V THE COMMISSIONER OF INCOME-TAX, NAGPUR5 that the firm is not recorgnised by English law as being separate from the members that compose it.

of the partnership Act provides for registration of the partnership being mandatory. With reference to. The Hon’ble Supreme Court in the case of Dulichand Lakshminarayan vs The Commissioner Of Income tax, [ AIRSCR ] considered similar situation and held “In our opinion, the word “Persons” in S.4 of the Indian Partnership Act contemplates only natural or artificial.

lakshminarayan case (partnership act) Topics: Corporation, Direct Taxation assessment of income - Section 4 of Partnership Act appellant a registered company entered into an agreement with Mill company appointing its agent for thirty years - amount received by appellant from Mill company were assessed under income tax - appellant.

petitioner: dulichand lakshminarayan vs.

RESPONDENT: THE COMMISSIONER OF INCOME-TAX,NAGPUR. DATE OF JUDGMENT: 17/02/ BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN BHAGWATI, NATWARLAL H. AIYYAR, T.L. VENKATARAMA CITATION: AIR SCR ACT: Indian lncome Tax .

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Lakshminarayan case partnership act
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