Davoodbhoy v. Commissioner-General of Inland Revenue – 1978_79_80 volume 1 page 022

In the case between Abasbhoy Davoodbhoy (partner in the firm “Abdul Hassen Davoodbhoy”) and the Commissioner-General of Inland Revenue, the Supreme Court addressed whether a written agreement (A1) executed between Abasbhoy Davoodbhoy and his children constituted a genuine sub-partnership under the Inland Revenue Act or was merely an artificial and fictitious arrangement for tax avoidance. It was determined that the agreement represented a valid family arrangement whereby the profits alone were shared, without a transfer of capital or goodwill, thus creating a lawful sub-partnership. The holding established that the sub-partnership was entitled to have its income assessed among its members under section 52, rather than attributing the full share of profits to the appellant alone. This princ