{"id":76115,"date":"1964-11-04T00:00:00","date_gmt":"1964-11-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964"},"modified":"2016-01-30T15:13:43","modified_gmt":"2016-01-30T09:43:43","slug":"commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","title":{"rendered":"Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964<\/div>\n
Equivalent citations: 1965 AIR 1703, \t\t 1965 SCR (2)\t 13<\/div>\n
Author: K Subbarao<\/div>\n
Bench: Subbarao, K.<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME-TAX, AHMEDABAD\n\n\tVs.\n\nRESPONDENT:\nA. ABDUL RAHIM & CO., BARODA\n\nDATE OF JUDGMENT:\n04\/11\/1964\n\nBENCH:\nSUBBARAO, K.\nBENCH:\nSUBBARAO, K.\nSHAH, J.C.\nSIKRI, S.M.\n\nCITATION:\n 1965 AIR 1703\t\t  1965 SCR  (2)\t 13\n CITATOR INFO :\n R\t    1965 SC1708\t (1,4)\n MV\t    1966 SC1490\t (23)\n F\t    1967 SC 383\t (14)\n RF\t    1969 SC 493\t (12)\n RF\t    1970 SC1343\t (22)\n R\t    1971 SC 383\t (5)\n D\t    1986 SC1152\t (6,12)\n\n\nACT:\nIncome\t Tax   Act,  1922,  Section  26A   registration\t  of\npartnership-More   than\t two   partners--Otherwise   genuine\nWhether\t can  be refused registration when  one\t partner  is\nbenamidar.\nBenamidar-Status of-If trustee of the real owner.\n\n\n\nHEADNOTE:\nA partnership consisting of three partners was reconstituted\nto take in a 4th partner who was a nephew of, and was  given\na  part\t out  of  his own share\t by,  one  of  the  existing\npartners.   The application by the new partnership firm\t for\nregistration under s. 26-A of the Income-tax Act, 1922,\t was\nrejected by the Income-tax Officer on the ground that as the\nnew  partner  was  a benamidar, the partnership\t was  not  a\ngenuine\t one.\tThe Appellate  Assistant  Commissioner,\t the\nAppellate  Tribunal  and the High Court, all took  the\tview\nthat the new partnership agreement was valid in law and\t the\nfact that one of the partners was a benamidar of another was\nnot a sufficient ground for refusing to register the firm.\nIt  was contended on behalf of the Revenue that\t apart\tfrom\nthe fact that the 4th partner was a dummy and therefore\t the\nnew  partnership was not a genuine one, the actual share  of\nthe old partner was not what was stated in the agreement but\nwas  the  total\t of  his apparent  share  and  that  of\t the\nbenamidar;  to this extent the agreement did not  contain  a\ncorrect\t specification of the individual shares of  partners\nas  required under s. 26-A and registration was,  therefore,\nrightly rejected.\nHELD : (dismissing the appeal)\n(i)  When  a firm makes an application under s. 26-A of\t the\nAct for registration, the Income-tax Officer can reject\t the\napplication   if  he  comes  to\t the  conclusion  that\t the\npartnership is not genuine or the instrument of\t partnership\nhas  not  specified correctly the individual shares  of\t the\npartners.   But\t once he comes to the  conclusion  that\t the\npartnership  is\t a genuine and valid one, he  cannot  refuse\nregistration  on  the ground that one of the partners  is  a\nbenamidar  of  another.\t If the partnership is\tgenuine\t and\nlegal,\tthe  share given to the benamidar  will\t be  correct\nspecification  of his individual share in  the\tpartnership.\nThe  beneficial\t interest in the income\t pertaining  to\t the\nshare  of  the\tsaid benamidar -nay have  relevance  to\t the\nmatter\tof assessment, but non in regard to the question  of\nregistration. [21D-F]\nR.   C.\t Mitter & Sons v. C.I.T., Calcutta, (1959)  Supp.  2\nS.C.R. 641; C.I.T. Madras v., Sivakasi Match Exporting\tCo.,\n(1964)\t53 I.T.R. 204; Sir Sunder Singh Majithia  v.  C.I.T.\nC.P. & U.P.,<\/a> (1942) 10 I.T.R. 457, referred to.\nThe  Central Talkies Circuit, Matunga, (1941) 9\t I.T.R.\t 44,\nconsidered.\nHiranand Ramsukh v. C.I.T., Hyderabad, (1963) 47 I.T.R. 598;\nP. A. Raju Chettiar v. C.I.T., Madras,<\/a> (1949) 17 I.T.R.\t 51,\ndistinguished.\n(ii) A benamidar is a mere trustee of the real owner and has\nno  beneficial interest in the property or the\tbusiness  of\nthe  real owner.  As in the case of a trustee, he  possesses\nthe legal character to enter into a\n14\npartnership   with  another,  and  the\tfact  that   he\t  is\naccountable  for  his  profits to, and has  a  right  to  be\nindemnified for his losses by, a third party or even by\t one\nof the partners does not disgorge him to the said character.\n[19D-E, G-H]\nGur Narayan v. Sheo Lal Singh, (1918), L.R. 46 I.A. 1, Aruna\nGroup of Estates, Bodinayakanur v. State of Madras,<\/a> (1962) 2\nM.L.J. 264, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 982 of 1963.
\nAppeal\tfrom the judgment and order, dated April 4, 5,\t1961
\nof  the Gujarat High Court in Income-tax Reference No. 8  of
\n1960.\n<\/p>\n
K.   N.\t Rajagopala  Sastri  and R.  N.\t Sachthey,  for\t the
\nappellant.\n<\/p>\n
T.   A. Ramachandran and O. C. Mathur, for the respondent.
\nThe Judgment of the Court was delivered by
\nSubba Rao, J. This appeal by certificate raises the question
\nwhether\t the  Income-tax Officer can refuse  to\t register  a
\ngenuine partnership entered into between more than 2 persons
\non  the\t ground\t that one of them is only  a  benamidar\t for
\nanother.\n<\/p>\n
The relevant facts may briefly be stated.  Three persons  by
\nname  Abdul Rahim Valibhai, Abdulla Rehman and\tAbdul  Rahim
\nMalanghbhai,  constituted  a partnership having 9  annas,  5
\nannas and 2 annas share respectively.  The said\t partnership
\nwas carrying on business in goat and sheep skins.  From\t the
\nbeginning  of  Samvat year 2012\t (15-11-1955  to  2-11-1956)
\nthere was a change in the constitution of the said firm.   A
\n4th partner by name Abdul Rehman Kalubhai was inducted\tinto
\nthe partnership with 2 annas share carved out of the 9 annas
\nshare  of  Abdul  Rahim Valibhai.   The\t said  Abdul  Rehman
\nKalubhai  is a nephew of Abdul Rahim Valibhai.\tOn March  6,
\n1956,  a  partnership deed was executed between the  said  4
\npersons.  Under the said partnership, Abdul Rahim  Valibhai,
\nAbdulla\t Rehman,  Abdul Rahim Malanghbhai and  Abdul  Rehman
\nKalubhai  had  7 annas, 5 annas, 2 annas and 2\tannas  share
\nrespectively.\tOn May 8, 1956, the said firm  presented  an
\napplication  to the Income-tax Officer for its\tregistration
\nunder s. 26A of the Indian Income-tax Act, 1922, hereinafter
\ncalled\tthe  Act.   The Income-tax  Officer  held  that\t the
\npartnership was a bogus one and, on that finding, refused to
\nregister  it.  The assessee took up the matter on appeal  to
\nthe  Appellate\tAssistant Commissioner, who  held  that\t the
\npartnership  agreement\twas valid in law and that  the\tfact
\nthat one of the partners was a benamidar of another was\t not
\na ground for refusing to register the firm, though
\n15<\/span>
\nit  might  entitle the Income-tax Officer  to  consider\t the
\nincome\tpertaining to the share of the benamidar as part  of
\nthe  income  of\t the real owner in  assessing  the  latter’s
\nincome\tto  tax.   The\tIncome-tax  Officer  questioned\t the
\ncorrectness  of the decision by preferring an appeal to\t the
\nAppellate  Tribunal, Bombay Bench.  The Tribunal  also\theld
\nthat  the  partnership was a genuine one and that  the\tfact
\nthat one of the partners gave away a small part of his share
\nto  his\t nephew would not disqualify  the  partnership\tfrom
\nbeing  registered under s. 26A of the Act.  At the  instance
\nof  the Revenue the following question was referred  to\t the
\nHigh Court
\n\t      “Whether a partnership in which one partner is
\n\t      the  benamidar  of another  partner  could  be
\n\t      registered under s. 26A of the Indian  Income-
\n\t      tax Act.”\n<\/p>\n
The  learned  Judges  of the High  Court  thought  that\t the
\nquestion as framed did not really bring out the true  matter
\nin  controversy\t between the parties  and,  therefore,\tthey
\nreframed the question as follows :\n<\/p>\n
\t      “Whether on the facts and in the circumstances
\n\t      of the case, the partnership constituted under
\n\t      the instrument of partnership, dated 6th March
\n\t      1956 could be registered under Section 26A  of
\n\t      the Indian Income-tax Act.”\n<\/p><\/blockquote>\n
The learned Judges answered the question in the affirmative.
\nThey held that as the partnership was a genuine one the fact
\nthat  one of the partners had no beneficial interest in\t his
\nshare by reason of some arrangement between him and  another
\npartner would not disentitle the firm from being  registered
\nunder the Act.\tHence the appeal.\n<\/p>\n
Mr.  Rajagopala\t Sastri, learned counsel  for  the  Revenue,
\nraised before us the following two points : (1) Abdul Rehman
\nKalubhai  is only a dummy and therefore, the partnership  is
\nnot  a genuine one; (2) even if Abdul Rehman Kalubhai  is  a
\nbenamidar of Abdul Rahim Valibhai in respect of the 2  annas
\nshare in the partnership, Abdul Rahim Valibhai has in fact 9
\nannas  share  in the partnership; as  the  partnership\tdeed
\nshows  that  he has only 7 annas share instead\tof  9  annas
\nshare,\tthere is no correct specification of his  individual
\nshare  within  the  meaning  of\t s.  26A  of  the  Act\tand,
\ntherefore,  the\t Income-tax  Officer  rightly  rejected\t the
\nfirm’s application for registration under s. 26A of the Act.
\nLearned\t counsel  for  the respondent, on  the\tother  hand,
\nargued that the question whether the partnership was genuine
\nor not is one of fact and indeed presumably for that  reason
\nthe question
\n16<\/span>
\nof  genuineness\t was not referred to the High Court  by\t the
\nTribunal and that the learned counsel for the Revenue cannot
\nnow  raise  that  question before this\tCourt.\t He  further
\nargued that, as the partnership is genuine, the circumstance
\nthat under some internal arrangement one of the partners  is
\na  benamidar  of another partner will not detract  from\t its
\nvalidity  or disqualify it from being registered  under\t the
\nAct.\n<\/p>\n
To  appreciate the contentions it will be convenient at\t the
\noutset\tto read the relevant part of S. 26A of the  Act\t and
\nalso the rules made thereunder.\n<\/p>\n
\t      Section  26A. (1) Application may be  made  to
\n\t      the Income-tax Officer on behalf of any  firm,
\n\t      constituted under an instrument of partnership
\n\t      specifying   the\tindividual  shares  of\t the
\n\t      partners, for registration for the purposes of
\n\t      this  Act and of any other enactment  for\t the
\n\t      time being in force relating to income-tax  or
\n\t      super-tax.\n<\/p>\n
\t      (2)   The\t application shall be made  by\tsuch
\n\t      person or persons, and at such times and shall
\n\t      contain such particulars and shall be in\tsuch
\n\t      form,  and be verified in such manner, as\t may
\n\t      be  prescribed; and it shall be dealt with  by
\n\t      the  Income-tax Officer in such manner as\t may
\n\t      be prescribed.\n<\/p>\n
\t      Rules 2 to 6B of the Rules made under s. 59 of
\n\t      the Act deal with the registration of firms.
\n\t      Rule   2.\t Any  firm  constituted\t  under\t  an
\n\t      Instrument   of  Partnership  specifying\t the
\n\t      individual  shares of the partners may,  under
\n\t      the  provisions of section 26A of\t the  Indian
\n\t      Income  Act, 1922 (hereinafter in these  rules
\n\t      referred\tto  as the Act), register  with\t the
\n\t      Income-tax Officer, the particulars  contained
\n\t      in the said Instrument on application made  in
\n\t      this behalf.\n<\/p>\n
\t      Such  application shall be signed by  all\t the
\n\t      partners personally……….\n<\/p>\n
\t      Rule  4.\tIf, on receipt\tof  the\t application
\n\t      referred to in Rule 3, the Income-tax  Officer
\n\t      is  satisfied that there is or was a  firm  in
\n\t      existence\t  constituted\tas  shown   in\t the
\n\t      instrument   of  partnership  and\t  that\t the
\n\t      application  has been properly made, he  shall
\n\t      enter in writing at the foot of the instrument
\n\t      or  certified  copy,  as the case\t may  be,  a
\n\t      certificate in the following form ……..\n<\/p>\n
\t      17<\/span><\/p>\n
\t      Rule  6B.\t  In  the event\t of  the  Income-tax
\n\t      Officer  being satisfied that the\t certificate
\n\t      granted  under Rule 4, or under Rule  6A,\t has
\n\t      been  obtained without there being  a  genuine
\n\t      firm   in\t  existence,  he  may\tcancel\t the
\n\t      certificate so granted.\n<\/p>\n
On  a  consideration of the said provisions,  among  others,
\nthis  Court  in\t R. C. Mitter &\t Sons.\tv.  Commissioner  of
\nIncome-tax,  Calcutta<\/a>(1), speaking through Sinha, J., as  he
\nthen  was,  held  that in order a firm may  be\tentitled  to
\nregistration  under  s.\t 26A  of  the  Act,  the   following
\nessential  conditions must be satisfied, viz., (i) the\tfirm
\nshould\tbe constituted under an instrument  of\tpartnership,
\nspecifying  the individual shares of the partners;  (ii)  an
\napplication  on behalf of, and signed by, all  the  partners
\nand  containing all the particulars as set out in the  Rules
\nmust  be made; (iii) the application should be\tmade  before
\nthe  assessment\t of  the firm under  section  23,  for\tthat
\nparticular  year; (iv) the profits or losses if any  of\t the
\nbusiness  relating to the accounting year should  have\tbeen
\ndivided or credited, as the case may be, in accordance\twith
\nthe terms of the instrument; and (v) the partnership must be
\ngenuine\t and must actually have existed in  conformity\twith
\nthe  terms and conditions of the instrument of\tpartnership,
\nin the accounting year.\t This Court again in Commissioner of
\nIncome-tax, Madras v. Sivakasi Match Exporting Co.<\/a> (2)\theld
\n:\n<\/p>\n
\t      “The  jurisdiction of the\t Income-tax  Officer
\n\t      is, therefore, confined to the ascertaining of
\n\t      two facts, namely, (i) whether the application
\n\t      for  registration\t is in conformity  with\t the
\n\t      rules made under the Act, and (ii) whether the
\n\t      firm  shown  in  the  document  presented\t for
\n\t      registration  is a bogus one or has  no  legal
\n\t      existence.”\n<\/p><\/blockquote>\n
\t      It  is,  therefore,  settled  law\t that  if  a
\n\t      partnership  is a genuine and valid  one,\t the
\n\t      Income-tax Officer has no power to reject\t its
\n\t      registration if the other provisions of s. 26A
\n\t      of  the Act and the rules made thereunder\t are
\n\t      complied with.\n<\/p><\/blockquote>\n
\t      In the present case the partnership was  found
\n\t      to  be  a genuine one.   All  the\t formalities
\n\t      prescribed  by  the rules have  been  complied
\n\t      with.   The individual shares of the  partners
\n\t      as shown in the Instrument of Partnership have
\n\t      been specified in the application.  Therefore,
\n\t      unless  there is some legal impediment in\t the
\n\t      way  of  a benamidar of one  of  the  partners
\n\t      being  a partner of the firm,  the  Income-tax
\n\t      Officer\twould\tnot   be   exercising\t his
\n\t      jurisdiction  if he rejected  the\t application
\n\t      for registration.\n<\/p><\/blockquote>\n
\t      (1) 1959] Supp. 2 S.C.R. 641.\n<\/p><\/blockquote>\n
\t      (2)(1964) 53 I.T.R. 204,209.\n<\/p><\/blockquote>\n
\t      18<\/span><\/p>\n
\t      The first question, therefore, is whether\t the
\n\t      benamidar\t of a person can be a partner  of  a
\n\t      firm.   Under  S. 2(6B) of  the  Act,  “firm”,
\n\t      “partner”\t and  “partnership”  have  the\tsame
\n\t      meanings\t respectively  as  in\tthe   Indian
\n\t      Partnership Act, 1932 (IX of 1932) :  provided
\n\t      that  the\t expression “partner”  includes\t any
\n\t      person who being a minor has been admitted  to
\n\t      the  benefits of partnership.  Under S.  4  of
\n\t      the  Indian Partnership Act, “Partnership”  is
\n\t      the  relation between persons who have  agreed
\n\t      to share the profits of a business carried  on
\n\t      by all or any of them acting for all.  If\t the
\n\t      partnership  is genuine, as it is held in\t the
\n\t      present  case, it follows that the 4  partners
\n\t      mentioned in the partnership deed must be held
\n\t      to  have\tagreed to share the profits  of\t the
\n\t      business\tcarried\t on by them  in\t the  manner
\n\t      specified\t in  the document.  Indeed,  in\t the
\n\t      present case the Instrument of Partnership and
\n\t      the application for registration contain clear
\n\t      recitals\tthat the 4 partners have  clear\t and
\n\t      definite shares in the profits of the firm.
\n\t      The  Judicial  Committee in Sir  Sundar  Singh
\n\t      Majithia v. Commissioner of income-tax, C.P. &
\n\t      U.P.  (1) posed the question that\t arises\t for
\n\t      consideration of the Income-tax Officer  under
\n\t      s.  26A  of  the\tAct.   Sir  George   Rankin,
\n\t      speaking for the Board, said :\n<\/p><\/blockquote>\n
\t      “When   a\t  document  purporting\tto   be\t  an
\n\t      instrument  of partnership is  tendered  under
\n\t      Section\t26-A  on  behalf  of  a\t  firm\t and
\n\t      application  is made for registration  of\t the
\n\t      firm  as constituted under such instrument,  a
\n\t      question\tmay arise whether the instrument  is
\n\t      intended by the parties to have real effect as
\n\t      governing\t their rights and liabilities  inter
\n\t      se  in relation to the business or whether  it
\n\t      has been executed by way of pretence in  order
\n\t      to  escape  liability  for  tax  and   without
\n\t      intention that its provisions should in  truth
\n\t      have  effect  as defining the  rights  of\t the
\n\t      parties as between themselves.  To decide that
\n\t      an instrument is in this sense not genuine  is
\n\t      to come to a finding of fact :…………….\n<\/p><\/blockquote>\n
In  view  of  the finding given by  the\t Tribunal  that\t the
\nInstrument  of Partnership was genuine, it follows  that  it
\nwas not executed as a pretence in order to escape  liability
\nfor tax, but in truth it defined the rights and\t liabilities
\nof the parties between themselves.\n<\/p>\n
This  leads us to the question whether the benamidar can  be
\nin law a partner of a firm.  In the context of the right  of
\na  benamidar  to sue in his own name to\t recover  immoveable
\nproperty, the
\n(1)  (1942) 10 I.T.R. 457,461-462.\n<\/p>\n
19<\/span><\/p>\n
Judicial  Committee  in\t Gur Narayan v.\t Sheo  Lal  Singh(1)
\ndefined the status of a benamidar in law thus :\n<\/p>\n
\t      “As  already  observed, the benamidar  has  no
\n\t      beneficial   interest  in\t the   property\t  or
\n\t      business\t that\tstands\tin  his\t  name;\t  he
\n\t      represents,  in fact, the real owner,  and  so
\n\t      far  as  their  relative\tlegal  position\t  as
\n\t      concerned\t  he   is   a\tmere   trustee\t for
\n\t      him…………. The bulk of judicial  opinion
\n\t      in India is in favour of the proposition\tthat
\n\t      in  a proceeding by or against the  benamidar,
\n\t      the  person  beneficially\t entitled  is  fully
\n\t      affected by the rules of res judicata.”\n<\/p><\/blockquote>\n
In  Aruna  Group  of  Estates,\tBodinayakanur  v.  State  of
\nMadras<\/a>(2) a Division Bench of the Madras High Court, on\t the
\nbasis  of  the said legal position, rightly  held  that\t the
\nbenami character did not affect the benamidar’s capacity  as
\npartner or his final relationship with the other members  of
\nthe  partnership.   It pointed out that “if any\t partner  is
\nonly  a benamidar for another, it can only mean that  he  is
\naccountable to the real owner for the profits earned by\t him
\nfrom and out of the partnership.” Therefore, a benamidar  is
\na  mere trustee of the real owner and he has  no  beneficial
\ninterest in the property or the business of the real  owner.
\nBut  in law, just as in the case of a trustee, he  can\talso
\nenter into a partnership with others.\n<\/p>\n
If  so,\t what is the principle of law  which  prohibits\t the
\nbenamidar of a partner from being also a partner along\twith
\nthe  said partner with others ? Qua the other  partners,  he
\nhas separate and real existence; he is governed by the terms
\nof  the\t partnership deed; his rights  and  liabilities\t are
\ngoverned by the terms of the contract and by the  provisions
\nof  the Partnership Act; his liability to third parties\t for
\nthe  acts  of the partnership is co-equal with that  of\t the
\nother partners; the other partners have no concern with\t the
\nreal  owner; they can only look to him for  enforcing  their
\nrights\t or   discharging  their   obligations\t under\t the
\npartnership deed.  Any internal arrangement between him\t and
\nanother\t partner  is  not  governed  by\t the  terms  of\t the
\npartnership;  that arrangement operates only on the  profits
\naccruing  to  the benamidar; it is outside  the\t partnership
\narrangement.   If a benamidar possesses the legal  character
\nto  enter into a partnership with another. the fact that  he
\nis  accountable for his profits to, and has the right to  be
\nindemnified for his losses by, a third party or even by\t one
\nof the partners does not disgorge him of the said character.
\n(1) (1918) L.R. 46 I.A. 1, 9.\t(2) (1962) 2 M.L.J. 294.\n<\/p>\n
20<\/span><\/p>\n
It  is true that different considerations may arise, if\t the
\npartnership  is\t only between two persons of whom one  is  a
\nbenamidar  of the other.  In that event the partnership\t may
\nbe bad not because the benamidar has no power to enter\tinto
\nthe  partnership but because the partnership in law  is\t the
\nrelationship between at least two persons and in the case of
\na  benamidar  and the real owner in fact there is  only\t one
\nperson.\t It may also be that in a case where a benamidar  is
\ntaken  as a partner with the consent of the other  partners,
\nhe will only be a “dummy”.  We do not propose to express any
\nfinal  opinion\ton the said two questions, as  they  do\t not
\narise in this appeal.\n<\/p>\n
A  Division  Bench of the Bombay High Court in\tThe  Central
\nTalkies\t Circuit,  Matunga,  In re(1) held  that  there\t was
\nevidence   to\tjustify\t the  finding  of   the\t  Income-tax
\nauthorities  that the alleged partnership was not a  genuine
\npartnership  and  that\tthey acted rightly  in\trefusing  to
\nregister  the firm.  That finding was sufficient to  dispose
\nof  the reference before the Court.  But Beaumont, C.J.,  in
\nthe course of the judgment made some observations which lend
\nsupport\t to  the contention of the appellant.\tThe  learned
\nChief Justice said :\n<\/p>\n
\t      “Speaking for myself, I should say that if  it
\n\t      were shown that one of the partners was only a
\n\t      nominee of a share allotted to him or her\t for
\n\t      another  partner,\t the  deed  would  not\tthen
\n\t      specify  correctly the individual\t shares.   I
\n\t      think it must specify correctly the individual
\n\t      and  beneficial  shares,\tbecause\t that  is  a
\n\t      matter  which  is relevant from the  point  of
\n\t      view  of the Income-tax authorities.   If\t the
\n\t      Assistant Commissioner had any evidence before
\n\t      him to lead to the conclusion that the  mother
\n\t      in  the  case  was not really  entitled  to  a
\n\t      beneficial  interest of 4 1\/2 annas  share,  I
\n\t      think he was justified in refusing to register
\n\t      the deed.”\n<\/p><\/blockquote>\n
With   great  respect,\twe  cannot,  agree  with  the\tsaid
\nobservations.  If a benamidar has the character of a trustee
\nand,  therefore, can enter into partnership with another  in
\nhis  own name, the share allotted to him in the\t partnership
\nmust  be  held\tto specify correctly  his  individual  share
\ntherein.   Kania,  J., as he then was, did not\texpress\t any
\nopinion on this aspect of the case.  A Division Bench of the
\nAndhra\tPradesh\t High  Court in\t Hiranand  Ramsukh  v.\tCom-
\nmissioner  of  Income-tax, Hyderabad(1) held that  a  person
\nshown  as a partner in a partnership deed was not a  genuine
\npartner and
\n(1)(1941)91.T.R.44,52.\n<\/p>\n
(2) 1963)47 T.R. 98.\n<\/p>\n
21<\/span><\/p>\n
therefore the Income-tax Officer was perfectly justified  in
\nrefusing  to  register the firm.  There\t the  assessee\tfirm
\noriginally  consisted  of  2  partners\twith  equal  shares,
\nnamely,\t Ramprasad  and\t Bhagwandas.   After  the  death  of
\nBhagwandas,  Ramprasad took his aunt, Mrs.  Chandrabai,\t and
\nhis minor son as partners.  The Income-tax Officer held that
\nboth  Mrs.  Chandrabai and Ramprasad’s minor  son  were\t not
\ngenuine partners but were mere dummies, and they were  shown
\nmerely\tas partners to reduce the incidence of tax.  As\t two
\nof  the\t three\tpartners  were\tnot  genuine  partners,\t the
\npartnership  itself  was not genuine.  Though  some  of\t the
\nobservations  in the judgment are wide, that  decision\tdoes
\nnot touch the present case.  The decision of the Madras High
\nCourt in P. A. Raju Chettiar v. Commissioner of\t Income-tax,
\nMadras<\/a>(‘)  is  also  one  where the  finding  was  that\t the
\npartnership  was not a genuine one.  ‘Mat decision  also  is
\nbesides the point.\n<\/p>\n
The legal position may be stated thus: When a firm makes  an
\napplication  under s. 26A of the Act for  registration,\t the
\nIncome-tax  Officer can reject the same if he comes  to\t the
\nconclusion  that  the  partnership is  not  genuine  or\t the
\ninstrument  of\tpartnership does not specify  correctly\t the
\nindividual shares of the partners.  But once he comes to the
\nconclusion  that the partnership is genuine and a valid\t one
\nhe cannot refuse registration on the ground that one of\t the
\npartners  is a benamidar of another.  If the partnership  is
\ngenuine\t   and legal, the share given to the benamidar\twill
\nbe the correct specification of his individual share in\t the
\npartnership.\tThe  beneficial\t interest  in\tthe   income
\npertaining  to\tthe  share of the said\tbenamidar  may\thave
\nrelevance to the matter of assessment, but none in regard to
\nthe question of registration.\n<\/p>\n
In  the result, for the aforesaid reasons, we hold that\t the
\nanswer given by the High Court-is correct.  The appeal fails
\nand is dismissed with costs.\n<\/p>\n
Appeal dismissed.\n<\/p>\n
(1) (1949) 17 I.T.R. 51.\n<\/p>\n
22<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 Equivalent citations: 1965 AIR 1703, 1965 SCR (2) 13 Author: K Subbarao Bench: Subbarao, K. PETITIONER: COMMISSIONER OF INCOME-TAX, AHMEDABAD Vs. RESPONDENT: A. ABDUL RAHIM & CO., BARODA DATE OF JUDGMENT: 04\/11\/1964 BENCH: SUBBARAO, K. BENCH: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-76115","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"1964-11-03T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-01-30T09:43:43+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"19 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964\",\"datePublished\":\"1964-11-03T18:30:00+00:00\",\"dateModified\":\"2016-01-30T09:43:43+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\"},\"wordCount\":3164,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Supreme Court of India\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\",\"name\":\"Commissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\"},\"datePublished\":\"1964-11-03T18:30:00+00:00\",\"dateModified\":\"2016-01-30T09:43:43+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"contentUrl\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/LegalindiaCom\\\/\",\"https:\\\/\\\/x.com\\\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\\\/\\\/www.legalindia.com\",\"https:\\\/\\\/x.com\\\/legaliadmin\"],\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/author\\\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Commissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","og_locale":"en_US","og_type":"article","og_title":"Commissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"1964-11-03T18:30:00+00:00","article_modified_time":"2016-01-30T09:43:43+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"19 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964","datePublished":"1964-11-03T18:30:00+00:00","dateModified":"2016-01-30T09:43:43+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964"},"wordCount":3164,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Supreme Court of India"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","url":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964","name":"Commissioner Of Income-Tax, ... vs A. Abdul Rahim & Co., Baroda on 4 November, 1964 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"1964-11-03T18:30:00+00:00","dateModified":"2016-01-30T09:43:43+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-a-abdul-rahim-co-baroda-on-4-november-1964#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"Commissioner Of Income-Tax, … vs A. Abdul Rahim & Co., Baroda on 4 November, 1964"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/76115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=76115"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/76115\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=76115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=76115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=76115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}