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TMI Blog1987 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... lywood industry. There were five partners, having the following shares : 1. Sajjan Kr. Bhajanka 30% 2. Prem Kr. Bhajanka 20% 3. Nirmal Kr. Bhajanka 20% 4. Smt. Bimla Devi Chamaria 15% 5. Smt. Sangita Devi Chamaria 15% The ITO found that on the date of commencement of the partnership business as also during a major part of the accounting year (1981- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes the minor liable for the losses during the period Km. Sangita remained a minor. In this context, he referred to Mukherjee's Indian Partnership Act, 1976, Edition, pages 249-151. 5. In reply, the assessee's learned counsel supporting the AAC's order brought to our notice the recitation made in the deed that an oral agreement was entered into by the parties concerned for carrying on business w.e.f. 1-1-1981. The contracting parties, it has been pointed out, could only be the persons who were legally entitled to enter into an agreement. It was stated that the parties competent to enter into the agreement for carrying on business intended to admit Km. Sangita as a partner on her attainment of majority. According to the learned counsel, Km. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether there was a valid partnership in existence during the assessment year 1982-83 when at the time of commencement of the business as also during the major part of the accounting year one of the partners remained a minor ? 7. The Hon'ble Gauhati High Court in the case of P. N. Sarmah v. CIT [1980] 125 ITR 553 considered the question whether a firm in which a minor admitted to the benefits of partnership and attaining majority during the relevant previous year but electing to become partner w.e.f. 1st day of previous year next after the date of attaining majority could be granted registration under section 185(1)(a). It was held that under the provisions of the Partnership Act, a minor admitted to the benefits of partnership had two optio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from the partnership deed accrued only at the end of the accounting year on which date the accounts have been drawn up by the partnership firm. In this context, we may refer to the Hon'ble Supreme Court decision in the case of E. D. Sassoon & Co. Ltd. v. CIT [1954] 26 ITR 27. The allocation of the profits was, therefore, in order and in accordance with the partnership deed. In the case of CIT v. Phair Laboratories [1985] 154 ITR 141 (Ker.)(FB), it was held that a firm which was created by word of mouth but the constitution of which was subsequently reduced in writing could very well qualify for registration. All the requirements was that there should be a valid instrument of partnership at the relevant time, i.e., during the year p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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