TMI Blog1967 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... tta. They carried on the business under the name and style of Messrs. Dhurmal Bajaj at Bombay. On 14th April, 1953, they entered into a document of partnership which gives rise to the present reference. The preamble of that document recites that the erstwhile partners have " agreed by mutual consent to admit Ramnivas Dhurmal, a minor, to the benefits of this partnership on the under-mentioned share and whereas it is now desired to place on record the terms of their said partnership, now this indenture witnesseth as under.... " Clause 5 is as follows : " By mutual consent of all the parties hereto, Ramnivas Dhurmal, a minor, has been admitted to the benefits of this partnership on the under-mentioned share, but his liability shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine. The Appellate Assistant Commissioner, in appeal, allowed registration for both the years holding that the firm was a genuine firm and in so far as the inclusion of the minor in the partnership is concerned, the case is governed by the decision of this court in Dwarkadas Khetan Co. v. Commissioner of Income-tax. The department appealed to the Tribunal but the Tribunal upheld the Appellate Assistant Commissioner's decision stating that " the main reason for filing these appeals appears to be that the department is not accepting the decision of the Bombay High Court in the case of Dwarkadas Khetan Co. v. Commissioner of Income-tax. The Tribunal, however, held that they were bound by that decision. Prior to the making of the refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough Kantilal Kesherdeo was a minor, he was admitted as a full partner and not merely to the benefits of the partnership, as required by section 30 of the Indian Partnership Act ; (2) that Kantilal Kesherdeo was a signatory to the document of partnership, though below his signature was appended the signature of his natural guardian ; (3) that Kantilal Kesherdeo was described as a full partner entitled not only to a share in the profits, but also liable to bear all the losses including loss of capital ; (4) that all the four partners were to attend to the business on equal terms and, if consent was needed, all the partners including the minor had to give their consent in writing, (5) that the minor was as much entitled to manage the affairs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention. The proper view and the only legal view was that, on a proper construction of this partnership deed, the three major signatories became the partners and the minor signatory was admitted to the benefits of the partnership. " In other words, in spite of the peculiar provisions of the deed in that case, the Division Bench had held that effect should be given to the partnership deed to the extent that it is capable of being brought into effect ignoring such of the provisions of the deed as conflict with law. It was precisely this reasoning that the Supreme Court did not adopt and the reason why the Supreme Court did not adopt it is clearly stated in the judgment of Mr. Justice Hidayatullah that in that case the document was in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of partnership under the Income-tax Act, " What the definition does is to apply to a minor admitted to the benefits of partnership all the provisions of the Income-tax Act applicable to partners. The definition cannot be read to mean that in every case where a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted to the benefits of partnership " (the underlining is ours). It is a cardinal rule in the reading of a precedent that a precedent is authority only for what it decides, and not for what may seem to follow from it. It was this one feature of that case which the Supreme Court was impressed with and upon which it decided that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtions ". What Mr. Joshi has urged is that the fact that the minor was to share the loss is clearly contrary to the provisions of section 30 of the Partnership Act and to that extent, therefore, the entire document is vitiated and cannot be recognised for the purpose of registration under section 26A. We have shown that in clause 5 there was already made a declaration that the minor was admitted only to the benefits of the partnership and his liability was not to be personal. The mere fact, therefore, that the partners erroneously provided in clause 7 that the loss shall also be distributed in like proportion, would not, in our opinion, without anything more, have the result of completely vitiating the document especially when they have pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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