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RAJARATNAM v. THE COMMISSIONER OF STAMPS
NLR39V481
1938 Present
:
Soertsz J. and de Kretser A.J.
RAJARATNAM v. THE COMMISSIONER OF STAMPS.
192-D. C. Jaffna, 58.
Estate duty-Business carried
on under vilasam-Admission of sons into partnership-No agreement in
writing-Validity-Registration, of business-Death of father-Claim by sons of a
gift of one-third share of partnership-Proof of gift-Ordinance No. 7 of 1840, s.
21 (4)-Estate Duty Ordinance, No.,8 of 1919, s. 8 (1) (c).
A person, who carried on business under the vilasam S. V., decided in 1929 to
admit his two sons into partnership and registered the business under the
business name S. V. The business was described as a partner ship, the partners
being the father and the two sons. No written agreement of partnership was
entered into. Although regular accounts were kept, there was no separate account
of the capital of each partner nor was the distribution of profits and loss
shown as against each partner.
In October, 1933, a document was executed declaring that they had been partners
in the business. On the death of the father in December, 1933, it was claimed on
behalf of the sons that S. V. had gifted a one-third share of the partnership to
each of them and that these shares should be excluded from the property of the
partnership passing on the death of S. V. for purposes of estate duty.
Held, that the partnership could not be established in the absence of a
written agreement.
Pate v. Pate (18 N. L. R. 289) and Idroos v. Sheriff (27 N. L. R. 231)
followed.
Held further, that there had been a gift by the father of a one-third
share of the business to each of the sons and that bona fide possession and
enjoyment of those shares had been assumed by the sons immediately upon the
gifts being made and thenceforward retained to the entire exclusion of the
father of any benefit to him by contract or otherwise, within the meaning of
section 8 (1) (c) of the Estate Duty Ordinance.
The presumption created by section 109 of the Evidence Ordinance operates only
when the existence of a partnership has been proved according to law.
THIS
was an appeal from an order of the District Judge of Jaffna on an appeal taken
to him under section 22 (3) of the Estate Duty Ordinance.
The facts are given in the headnote.
The only question argued in appeal concerned the extent of the share that passed
in the business carried on under the business name of S. V. and registered in
the name of the deceased S. V. and the two appellants as partners.
H. V. Perera, K.C. (with him N. Nadaraja and N. Kumarasingham), for the
appellants.-A partnership need not always be proved by an agreement in writing.
For tax purposes, if there is a partnership in fact, there is liability. There
is ample evidence in this case of a, partnership from March 2, 1929. A
partnership can well exist without a formal agreement in writing.
Under section 21 (4) of Ordinance
No. 7 of 1840, there was no onus on appellants to prove writing. Pate v. Pate
[1] can be distinguished from this case because that was an action between two
partners. The existence of a partnership can be established by oral evidence as
held in Idroos v. Sheriff [2(1925)27N.L.R.231.] Section 21 (4) consists of two
parts ; first part applies only to a case where a partner seeks to enforce a
contract of partnership as against another partner.
In this case, the only question is whether there was a contract of partnership.
No relief is sought for on the terms of the contract. The provisions of
Ordinance No. 7 of 1840 are only of evidentiary value. The agreements referred
to there are not declared null and void merely by reason of absence of writing.
It is only where the basis of a suit is partnership that proof of writing is
necessary.-Vide Pate v. Pate [1(1915)18 N.L.R. 289. ]
The existence of a partnership was clearly established. The onus was on the
Crown, therefore, to prove that there was no partnership. See se
