DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE
Sunil Krishna Paul And Other vs Commissioner Of Income-Tax,
West Bengal

SUBJECT
LAW OF CONTRACTS-II

NAME OF THE FACULTY

C.H.LAKSHMI MADAM

NAME OF THE STUDENT

P.KAMALAKAR REDDY

ROLL NO & SEMESTER

2015045 & Semester-III
Acknowledgement
I would sincerely like to put forward my heartfelt appreciation to our respected Law of
contracts faculty, C.H.LAKSHMI Madam for giving me a golden opportunity to take up this
project regarding – Sunil Krishna Paul And Other vs Commissioner Of Income-Tax, West
Bengal . I have tried my best to collect information about the project in various possible ways
to depict clear picture about the given project topic.
TABLE OF CONTENTS

1. Facts
2. Issues
3. Legal provisions
4. Judgement
5. Related case laws
6. conclusion
Case:- Sunil Krishna Paul And Other vs Commissioner Of Income-Tax, West Bengal

Petitioner: Sunil Krishna Paul And Other

Respondent: Commissioner Of Income-Tax, West Bengal

Judges: K. C. SEN J
Date of Judgment: 17-02-1964

Facts:- Anil Krishna Paul and Jogendra Nath Nandi had acquired a right of receiving
commission of 1% on sales from Messrs. Annapurna Cotton Mills. The said Jogendra Nath
Nandi died on the 7th June, 1950. Along with Anil Krishna Paul, he entered into an
agreement dated 26th January, 1950. The benefits of the agreement were transferred in favour
of the applicants, Sunil Krishna Paul and Amar Krishna Poddar, by a deed of assignment
dated 10th December, 1951, executed by Anil Krishna Paul and the legal heirs of Jogendra
Nath Nandi. On the 9th of August, 1954, the assignees, Sunil Krishna Paul and Amar Krishna
Poddar, entered into a partnership to share the commission receipts and the instrument of
partnership was executed on the said date. It was alleged by the applicants that they carried
on the business of partnership by employing staff in order to verify the correctness of the
sales of the company

Issues:- It was alleged by the applicants that they carried on the business of partnership by
employing staff in order to verify the correctness of the sales of the company.

Legal Provisions:-

Partnership

"Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.

Section 4 in The Indian Partnership Act, 1932

Definition of “partnership”, “partner”, “firm” and “firm name”.—’’Partnership” is the
relation between persons who have agreed to share the profits of a business carried on by all
or any of them acting for all. Persons who have entered into partnership with one another are
called individually “partners” and collectively a “firm”, and the name under which their
business is carried on is called the “firm name”.

Judgement:-

Before dealing with the question as to what the expression "business carried on" means, we
shall refer to some decisions placed before us by Mr. Subimal Roy in support of his
contention. His main contention is that a business does not necessarily mean that income and
profit should invariably by derived therefrom and this does not involve any undertaking of an
industrial or commercial nature. Mr. Roy has referred us to the observations of this court in
the case of Rogers Pyatt Shellac & Co. v. Secretary of State for India. At page 1088 their
Lordships observed that the word "business" is one of large and indefinite import and
connotes something which occupies attention and labour of a person for the purpose of profit.

Mr. Roy however in the second branch of his argument does not dispute that business
connotes organised course of activity or conduct with a set purpose for earning the profit or to
exploit the property purchased in order that one should get the highest amount. Accordingly,
it is submitted that, in the instant case, unless there was the activity of keeping a watch as to
whether Annapurna Cotton Mills Ltd. were not suppressing the quantum of sale, by
employment of staff, the income could not have been earned.

The Appellate Tribunal found as a fact that no business was carried on in the relevant
accounting year. As such even assuming but not finding that there is a partnership in the
instant case within the meaning of section 4 of the Indian Partnership Act, the applicants were
not entitled to the benefit of registration under section 26A of the Act. The applicants will
pay the costs to the respondents.

Related Case laws

Shri Hari Sigh vs M/S A.D. International & Ors

Plaintiff has filed a suit for recovery of arrears of rent amounting to Rs. 2,27,500/ against
defendants no. 1, 2 and 3. Defendant no.1 is a partnership concern in the name and style of
M/S AD International and defendants no. 2 and 3 are partners in the defendant firm. Plaintiff
claims himself to be the owner of property. present application filed by defendant no.3 is
dismissed as defendant no.3 being a partner is liable to pay the rents and he can not be
discharged from his liability. As the defence taken by defendant no.3 and grounds taken in
the application are false and vexatious, so, a cost of Rs. 3,000/ is also imposed upon him.