Partership Firm ( registered ) shows Profit - in the audited balance sheet - and also files Income-tax return accordingly.
However the Firm does not pay the share in Profits as per the Deed to the Partners. One Partner retires and the retirement is also notified / registered. The retiring Partner claims his share in Profits for the years he was a Partner. He gets a reply saying that ," actually the fim is under LOSS, but we showed Profits & filed the RETURN".
Is the stand taken by the firm , " LEGALLY TENABLE ", since the Firm has shown PROFITS to Govt