9911796707
TMI Blog1981 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... The ITO allowed the claim of the assessee in his assessment order dated 30-11-1978. On perusal of records of the assessment of the assessee, the Commissioner found that one of the clauses in the dissolution deed mentions that as it was not possible to ascertain the value of intangible rights such as goodwill, quota rights, selling agency rights and business connections, the retiring minors in consideration of their agreement to allow the other remaining partners to use such intangible assets were allowed payments of Rs. 96,000. According to the Commissioner, the provisions of the Indian Partnership Act clearly shows that the minors had no right in the assets of the firm and as such the ITO has committed an error in law in treating them as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 48. Section 48(b)(iv) provides that the residue, if any, shall be divided amongst the partners in the proportion in which they were entitled to share profits. Therefore, it is very clear from the plain reading of the provisions of sections 30 and 48 that the scheme of section 30 is for the benefit of minors and at the time of dissolution the share in the property should be given to the partners in accordance with the share of profit in the partnership firm. In support of his contention he relied on the observations in CIT v. Devson Ltd. [1975] 98 ITR 311 (J&K) wherein it is held by their Lordships that minor has equal right in the property of the firm as the major partners in the firm. On the other hand, Shri Harne, the learned department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of their agreement to allow the remaining partners to use intangible assets, the firm will pay to the minors the following amounts: 1. Jayesh B. Mistry Rs. 4,000 per month 2. Lata B. Mistry Rs. 2,000 per month 3. Sangeeta B. Mistry Rs. 2,000 per month ------------------ Rs. 8,000 ------------------ The payment of the amount involved is not in dispute. The controversy centres around the issue whether the minors had any right in the assets in question before the dissolution of the firm. The assessee cited the following observations of the various High Courts and the Supreme Court : 4. In CIT v. Khetan & Co. [1962] 45 ITR 170, their Lordships of the Calcutta High Court observed as under : "For instance, sub-section (2) gives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at share is not more than his right to participate in the property of the firm after its obligation has been satisfied. Such a minor cannot sue the partners for an account of the firm or for the payment of his share of the property or profits of the firm, except when he severs his connection with the firm, in which case the amounts of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in section 48 of the Partnership Act. Where the firm is dissolved, as here, by all the partners acting together, the amount of the share of the minor shall be determined along with the share of the partners." These observations also throw light on the provisions of section 30(2) read with section 48. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare of the minor in the firm. The firm was dissolved and the minors have allowed their rights of assets goodwill, etc., to be used by the continuing partners for which they were entitled under the provisions of section 48 of the Partnership Act (sic). The provisions of section 48(b)(iv) postulates that the residue, if any, shall be divided amongst the partners in the proportion in which they are entitled to share profits. Sub-section (2) of section 30 of course mentions that the share of the property and profit should be such as agreed upon but sub-section (4) clarifies the position that a minor cannot sue the partners for accounts or for payment of his share of the property or profits of the firm, save when severing his connections with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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