The Gujarat High Court while quashing the provisional attachment of land held that there is a difference Between Assigning Share in Profit in Partnership Firm and Constituting Sub-Partnership.
Mr. S.N. Soparkar, the learned senior counsel appearing for the writ-applicant vehemently submitted that the impugned order of provisional attachment in exercise of powers under Section-281B of the Act to the extent of Block No.142, New Block No.166, T.P.-22, F.P.-53, is erroneous in law and without jurisdiction. The argument of the learned senior counsel proceeds on the footing that under Section-281B what can be attached is the property of the assessee. The assessee in the present case is Arnav Savaliya. It is argued that Nitaben Radadiya as one of the partners of the writ-applicant – Firm might have assigned her 2.5% share in the profit of the firm in favour of Arnav Savaliya, but that does not mean that the block No.142, which is otherwise an asset owned by the Partnership Firm would become one of the properties of the assessee, and the same can be attached under Section-281B of the Act.
On the other-hand, this writ-application has been vehemently opposed by Ms. Kalpana Raval, the learned senior standing counsel appearing for the revenue. Ms. Raval would submit that no error not to speak of any error of law could be said to have been committed by the Department in passing the impugned order of provisional attachment. She would submit that the very object of provisional attachment as envisaged under section-281B of the Act is to protect the interest of the revenue.
The division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore has held that there is a fine distinction between a case where a partner of a firm assigns his/her share in favour of a third person and a case where a partner constitutes a sub-partnership with his/her share in the main partnership. The case on hand indisputably is not one of a sub-partnership though in view of Section-29(1) of the Partnership Act, Arnav Savaliya as an assignee may become entitled to receive the assigned share in the profits from the writ-applicant – Firm, not as a sub-partner because no sub-partnership came into existence, but as an assignee to the share of profit of the assigner-partner viz. Nitaben Shaileshbhai Radadiya.
“In the overall view of the matter, we are convinced that the provisional attachment of the subject land under Section-281B of the Act at the instance of the revenue is not sustainable in law,” the court said.
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