TMI Blog1975 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... first period was from November 11, 1958, to October 5, 1959, and the other was from October 6, 1959, to October 31, 1959. For the first period the assessee-firm applied for renewal of registration and so also for the second period. The Income-tax Officer rejected both the applications for the reason that in respect of the first period, Mohanlal, minor, had been described is a full partner and the loss of the business had been actually allocated to his share as well. For the second period also he gave the same reasons. We are, however, not concerned with the assessment year 1960-61 in this reference. For the assessment year 1962-63, with which we are concerned in this reference, the Income-tax Officer refused registration on two grounds: firstly, that no application for registration had been filed and secondly, that the minors had been shown as full-fledged partners. The assessee-firm filed three appeals against these three orders before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner disposed of those appeals by separate orders and he agreed with the Income-tax Officer. For the assessment year 1962-63 he, however, held that it was not correct to say th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1932. According to the learned counsel effect should be given to the words "the term 'partner' includes a minor given the benefits of partnership" appearing in the deed after the name of Mohanlal. The qualification after Mohanlal's name, learned counsel has submitted, will prevail wherever Mohanlal's name appears in the deed and this will also govern the right and liability of Mohanlal in the partnership. It is the submission of the learned counsel that for the purpose of section 26A of the Indian Income-tax Act, 1922, the deed of partnership should be construed reasonably and the said deed, when so construed, it cannot be said that the minor, Mohanlal, has been treated as a full-fledged partner and has not been given only the benefits of the partnership. Learned counsel, therefore, has contended that the 1959 deed does not go beyond section 30 of the Partnership Act, 1932. He has also referred to section 2(33) of the Income-tax Act, 1961, which states, inter alia, that the expression "partner" shall also include any person who, being a minor, has been admitted to the benefits of the partnership and also to rule 2 and rule 22(2) of the Income-tax Rules, 1962. In support of his con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law of partnership must be considered apart from the definition in the Income-tax Act. The Supreme Court observed: " Section 30 of the Indian Partnership Act clearly lays down that a minor cannot become a partner, though with the consent of the adult partners, he may be admitted to the benefits of the partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the income-tax authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the income-tax authorities to register a document which is different from the one actually executed and asked to be registered." In the case of Commissioner of Income-tax v. Shah Jethaji Phulchand and again following the said decision in the case of Commissioner of Income-tax v. Shah Mohandas Sadhuram, the Supreme Court while dealing with section 26A of the Indian Income-tax Act, 1922, observed that the partnership deed must be construed reasonably. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held by the Kerala High Court that section 30(3) of the Indian Partnership Act only prohibited the imposing of any personal liability on the minors; all that it did, in effect, was to provide that the shares of the minors were liable for the acts of the firm. That was permissible under sub-section (3) of section 30 of the Indian Partnership Act, 1932, and refusal of registration could not be sustained. The short point which falls for determination in this reference is whether on a reasonable construction of the 1959 deed can it be said that the minor, Mohanlal, has been treated as a full partner or be has been (only admitted to the benefits of the partnership. The answer to the question, in out opinion, depends on the view we take about the said deed. It is, therefore, necessary to set out the relevant portion of the deed. The deed of agreement is made on the 9th day of November, 1959, to record the agreement already reached and acted upon since the 6th day of October, 1959, between (1) Shri Hariprasad Vijaivargiya (hereinafter called the "first party") of the first part, (2) Shri Ghanshyamdas Vijaivargiya (hereinafter called the "second party") of the second part, (3) Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts on the 5th day of October, 1959, as their respective shares in the capital of the business on the 6th day of October, 1959, and the party of the seventh part shall get as his capital on the 6th day of October, 1959, the amount which stood in the share of the deceased partner, in the last balance-sheet. 3. The profits and losses of the partnership shall be and continue to be borne by the partners hereto in the following proportions: (1) Shri Hariprasad Vijaivargiya 0-3-0 (three annas in the rupee). (2) Shri Ghanshyamdas Vijaivargiya 0-2-6 (two annas six pies in the rupee). (3) Shri Shivnarayan Vijaivargiya 0-2-6 (two annas six pies in the rupee). (4) Shri Narayan Prasad Vijaivargiya 0-1-6 (one anna six pies in the rupee). (5) Shri Soorajmal Vijaivargiya 0-1-6 (one anna six pies in the rupee). (6) Shri Mohanlal Vijaivargiya 0-2-6 (two annas six pies in the rupee). (7) Shri Nanda Kishore Vijaivargiya 0-2-6 (two annas six pies in the rupee). " In the deed set out above two things need be noticed : (i) after the name of the 6 parties it is stated that "the term 'partner' includes a minor given the benefits of partnership", and (ii) in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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