HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
K. D. Kamath & Co. v. Commissioner of Income-tax, Bangalore
Civil Appeal No. 1242 of 1968
[1972] 1 SCR 1034 ·
Indian Income-tax Act, 1922: section 26A · Indian Partnership Act, 1932: sections 4, 11, 14 and 18
Holding and result. Profit-and-loss sharing and business carried on by one acting for all established partnership. Internal restrictions on working partners did not destroy agency; registration was allowed.
Sources & disclosures includedDownload original judgment / order
Two-judge bench; judgment delivered by C. A. Vaidialingam, J. · C. A. Vaidialingam, J. · P. Jaganmohan Reddy, J.
Assessment years: 1959-60
01 · Facts of the case
A six-person firm placed management with the first partner and required the five working partners to follow his directions; they could not borrow or pledge firm property without authority. The Income-tax Officer and High Court treated the arrangement as lacking mutual agency.
02 · Discussion by the Hon’ble Court
Partnership required agreement to share profits and losses and business carried on by all or any acting for all. Exclusive management and internal restrictions are permissible contractual arrangements. Once those essentials exist, a restriction on borrowing regulates inter se authority without erasing partnership as to outsiders.
Source: Primary judgment: reasoning
03 · Judicial decision
The deed created a genuine partnership satisfying section 4; the firm qualified for section 26A registration.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
High Court answer reversed; question answered for the assessee; appeal allowed with costs.
05 · AKHB REVIEW POINT
AKHB analysis: test the deed and actual relationship for profit/loss sharing and agency. Centralised control or internal borrowing limits do not alone negate partnership.
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
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Later treatment
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General legal and tax research only; not legal or tax advice. Verify the complete judgment, governing statutory version and subsequent judicial treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding, and no current-law clearance is claimed.