TMI Blog1992 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has further followed the direction of the Inspecting Assistant Commissioner under section 144B of the Income-tax Act ( "the Act") that the minors have been made to share the losses suffered by the firm which is prohibited under the Partnership Act and hence directing him to refuse registration. On appeal, the Commissioner (Appeals) has confirmed the order of the Income-tax Officer refusing registration. Further appeals of the assessee were allowed by the Appellate Tribunal on the ground that the lower authorities having admitted that the guardians acted as representative assessees for the minors, fell into an error in concluding that the minors were partners and that they were made to share losses, if any, incurred by the firm. The T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of his minor son, Master Sheil Shashikant Mirji) 12. Mr. Ashok Surendra Mirji age 39 years. (being a representative of his minor daughter, Miss. Savitrai Ashok Mirji) " The preamble to the deed which throws light upon the changes made in the reconstituted firm reads thus : " Whereas parties Nos. 1 to 7 and Mr. Shailesh Shantilal Shah, Mrs. Rajani Rajkumar Shah, Mrs. Mangal Ramesh Shah, Mr. Shashikant Surendra Mirji (being karta of HUF) and Mr. Ashok Surendra Mirji in his individual capacity had been carrying on business in partnership under the name and style of 'Messrs. Manickbag Garage' in accordance with the deed of partnership dated January 1, 1979, and whereas the said Mr. Shailesh Shantilal Shah, Mrs. Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------------------------------------------------------------------------------ Clause 14(a) is another significant clause which states that " the death or retirement or insolvency of any partner shall not dissolve the partnership but such partner shall cease to be a partner on the happening of such event". On behalf of partners at Sl. Nos. 9 to 12, the guardians have signed as representatives of their minor children. The answer to the question, in our opinion, ultimately depends upon the correct interpretation of the partnership deed itself. The scope of powers of the guardian of a minor to enter into partnership on his behalf are well settled. The guardian of a minor is entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions as the major partners. The contention of the assessee appears to be that, in fact, the respective guardians of the four minors entered into partnership agreements and they, in law, were the partners qua the other partners, though they were accountable to the minors whom they represented. The Tribunal having accepted this contention has gone a step further in treating the guardians as benamidars for the minors and, therefore, held that for the internal relationship among the partners it is the guardians only who are to be considered as partners and not their wards. For this purpose, they have relied upon the decision of the Supreme Court in CIT v. A. Abdul Rahim and Co. [1965] 55 ITR 651. The observations of the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts or discharging their obligations under the partnership deed. It appears to be well-settled that the expression " benami " denotes transactions for the benefit, not of the persons taking part in the transactions, but of the person or persons not mentioned in the transaction. As such it seems to us that in the circumstances of the case, especially in view of the names of the minors being specifically shown as parties, represented by their respective guardians, and the undisputed fact that the capital invested belongs to the minors, the Tribunal clearly fell into an error in applying the concept of " benami " for justifying registration. In that context, the observations of the Supreme Court in CIT v. Bagyalakshmi and Co. [1965] 55 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, under the law, a minor can be admitted only to the benefits of partnership. The rules which have been framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application. The definition is designed to confer equal benefits upon the minor by treating him as a partner ; but it does not render a minor a competent and full partner. For that purpose, the law of partnership must be considered, apart from the definition in the Income-tax Act. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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