TMI Blog1997 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... er in his order passed under section 185(1)(b) of the Act held that the partnership deed is defective and the firm is not entitled to registration. The constitution of the assessee-firm is as under : 1. Sri Sechan Ram S/o Late Hari Das All major partners 20% 2. Sri Ghasi Ram S/o Sri Ganga Ram " 07% 3. Sri Puhawashi Prasad S/o Ghasi Ram " 13% Besides the major partners following minors were also admitted to the benefits of the partnership : 1. Ram Kumar S/o Khyal Chand All minor partners 20% 2. Pradeep Kumar S/o Ram Shog " 20% 3. Deepak Kumar S/o Kashi Nath " 20% Clause 5 of the partnership deed is as under : "That at the close of each year the account of the firm will be prepared after adjusting all the business expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The case of the Supreme Court reported in Mandyala Govindu and Co. v. CIT [1976] 102 ITR 1 is clearly distinguishable as in that case there was no reference to sharing of losses of the firm by the partners in the partnership deed while in the case before us so far as the minor's liability for losses is concerned, a specific clause has been inserted indicating therein that he shall be minor liable to the loss to the extent of his share according to section 30 of the Indian Partnership Act. . . . The only interpretation that was possible is that the minor will be liable for losses as per the provisions of section 30(3) of the Indian Partnership Act and he will not be personally liable for the same. Whatever surplus remains after shari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 32.5 per cent., respectively. Almost a similar question arose in Progressive Financers v. CIT [1997] 224 ITR 595 (SC), and then the court held as under : "As minor Sunitha was admitted to the benefits of partnership it is obvious that she had not to share any loss. The losses were to be distributed among the major partners only. Since they were to share the profits in the proportion in which they had contributed the capital it was implied that they were to share the losses in the same ratio." This being so, the registration could not have been refused on the ground that there was no clear stipulation in the partnership deed as to how the losses falling to the share of the minors would be borne by the major partners. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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