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TMI Blog1981 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ee firm came into existence vide partnership deed dt. 13th April, 1974 with S. Surjit Singh & S. Harjit Singh as partners. A minor, S. Satnam Singh was admitted to the benefit of the sole partnership. The relevant clause in the partnership deed in the matter of the sharing of the profits and losses of the firm by the said persons is in the following terms: "Share: That the share of the partners in the profit and loss shall be as under: S Surjit Singh 40 per cent S.Harjit Singh 30 per cent S.Satnam Singh 30 per cent S. Satnam Singh will be the partner of in share of profits and not losses" 3. The claims of the assessee for registration of the assessee firm for the first year and for continuation of registration for the second yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses, if any, of the firm would be shared by the two partners, S. Surjit Singh & S. Harjit Singh in the ration of 40 per cent 30 per cent. The assessee firm was entitled to registration in the appeal for the first year. The Deptl. Rep took us through the decision of the Supreme court in Mandyala Govindu & Co.; more particularly at page 7 and strenuously contended that the aforesaid clause in the partnership deed laying down the shares and profits of the two partners in the firm and the sharing of the profits only by the minor was admitted to the benefit of the partnership points only to the conclusion that the minor was admitted to the benefit of the partnership. There was no stipulation in that clause with regard to the sharing of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is so reasonably interpreted, the loss of the firm, if any, would not be shared by the minor, who was admitted to the benefit of the partnership. The said loss will be distributed between the two partners in the ratio in which they were to share the profits,viz., 40 per cent & 30 per cent. This also, according to the ld. counsel, finds support form s.13(b)of the Indian Partnership Act,1932. 6. We have given consideration to the above arguments. The short point for decision is whether the aforesaid clause reproduced in para 2 in the partnership deed regarding sharing of the profits & losses of the firm is defective in the sense that there is no mention of the share of losses, if any, in the partnership between the two partners S. Surj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing entitled to the profit and not liable to the losses of the firm. Though this argument is attracted, initially it is not acceptable. We say so because as held by the Allahabad High Court in Hiralal Jagannath Pd. to specify in a partnership deed the shares of the partners in the losses when there is no dispute as to the genuineness of the firm will not make the deed invalid so as to prevent the firm from being registered under the Act. In this Allahabad case, the relevant clause regarding sharing of the profits and losses was in the following terms: "That in the partnership business the share of the 1st party shall be 1/7th and in the same way the share of each of the other partners shall be 1/7th and each party shall be entitled to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in Mandyala Govindu & Co.'s case has been recently considered by a Full Bench decision of the A.P. High Court in CIT vs. V. Krishna Mining Co. their Lordships have observed: "It is pertinent to notice that there was no provision in the instrument of partnership indicating the proportion in which the partners were to bear the losses. This is made clear in the judgment of this Court in CIT vs. Manyala Govindu & Co.(1971)82 ITR 926". "...............Clause 2 of the partnership deed specifies the shares of the partners including that of the minor partner in the profits and it also specifies that the profits of the partnership business shall be divided and enjoyed according to the shares specified in Clause 2 of the Partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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