9911796707
TMI Blog1969 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... er 12, 1958, the assessee is entitled to registration for the assessment year 1960-61 ?" For the assessment year 1961-62 : " Whether, on a proper construction of the deed dated December 10, 1959, the assessee is entitled to registration for the assessment year 1961-62 ? " The material facts, which give rise to the above questions of law, are stated below : Consequent upon the exit of one of the partners, the assessee-firm was reconstituted as evidenced by the instrument of partnership dated December 12, 1958. The reconstituted firm consisted of five partners. Two minors, Champalal and Baboothmal were admitted to the benefits of the partnership. The firm was further reconstituted on one of the partners, Maniklal, leaving the firm on Nov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... still a reading of the document as a whole shows that no distinction was made between the major partners and the minors admitted to the benefits of the partnership in this behalf. For those reasons, the Commissioner of Income-tax was of the view that the registration of the partnership firm for both the assessment years was not only illegal, but also invalid, as it contravened section 30 of the Indian Partnership Act. In that view the learned Commissioner of Income-tax cancelled the registration for both the assessment years as stated above by relying upon the decision in Commissioner of Income-tax v. Md. Khalid Faquih & Co. Aggrieved by the separate orders passed by the Commissioner of Income-tax cancelling the registration of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to the benefits of the partnership and they are not liable to any loss in the business. (1) Hirachand Kesarimal 0-5-0 (2) Seshmal Kesarimal 0-5-0 (3) Manchalal 0-2-9 (4) Devichand 0-2-3 (5) Baboothmal Seshmal (minor) 0-2-0 (6) Champalal Hirachand (minor) 0-2-0 (7) Manikyachand 0-1-6 (8) Charity 0-0-9 ------------------- 1-5-3 ------------------- Partners except the minors shall attend to the business when need arises. The partnership shall be determined or dissolved whenever any partner at his will gives notice in writing. Each partner can cease to be a member of the partnership on giving one month's notice in writing to the remaining partners and the out-going partner's account shall be settled including the proportionate sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip with the free consent of all the other partners. The profits of the partnership will be shared by the partners as per their shares but losses will be borne only by the major partners. Under the deed dated December 10, 1959, the minors are required to contribute capital. Both the instruments of partnership are signed by the guardians acting on behalf of their minor sons. Would these factors vitiate the partnership agreement and make the minors full-fledged partners in contravention of section 30 of the Partnership Act? This very question came up for decision in R. C. No. 2/66 before a Division Bench of this High Court to which one of us (Gopal Rao Ekbote J.) was a party. In his judgment, speaking for the Division Bench, my learned broth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by himself by issuing a written notice. That clause, therefore, does not, in our opinion, vitiate the partnership and disentitle it from getting registration. We will then consider the effect of the guardians signing the deed on behalf of the minors and agreeing to contribute capital. The question is whether such a clause would militate against the validity of the instrument of partnership. There is nothing in law which prevents a guardian from entering into a partnership contract on behalf of his minor ward. What is prevented under law is that the guardian cannot contract on behalf of his minor ward as to make him a full-fledged partner. If a guardian enters into a contract of partnership on behalf of his minor, he may agree to contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified the same on becoming majors. However, such contracts are always binding on the guardians who made those contracts on behalf of their minor wards. Thus, the instruments of partnership which are now under consideration do not disclose any legal flaw which vitiates them or which contravenes the provisions of section 30 of the Partnership Act. The reconstituted partnership firms as evidenced by both the instruments of partnership dated December 12, 1958, and December 10, 1959, are, therefore, entitled for registration and the Commissioner of Income-tax was wrong in cancelling the registration for both the assessment years, and the Tribunal in upholding the cancellation of registration for the assessment year 1961-62. For the above reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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