Partnership registration upheld where a minor partner attained majority before year-end and became competent to contract.

A partnership deed effective from an earlier date was not invalid for registration purposes where the partner who had been a minor attained majority during the accounting year and became competent to contract before profits and losses were finally settled. The court treated the facts as consistent with its earlier ruling on a similar deed and distinguished cases where the minor never became a major during the relevant year. On that basis, the firm was entitled to registration under the Income-tax Act, and the Tribunal's view in its favour was upheld.

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Issues: Whether the assessee-firm was entitled to registration under section 185(1)(a) of the Income-tax Act, 1961 for the assessment year 1973-74 when the partnership deed was made effective from a date on which one partner was still a minor but attained majority during the previous year.

Analysis: The decisive consideration was that the partner concerned attained majority during the accounting year and, before the close of the year when the accounts of profits and losses were finalised, became competent to contract as a full-fledged partner. The facts were held to be on all fours with the earlier decision of the same court, in which a partnership deed given effect from an earlier date was not treated as invalid where the relevant partner had become a major before the close of the financial year. The contrary view based on cases where the minor did not attain majority during the accounting year was distinguished on facts.

Conclusion: The assessee-firm was entitled to registration, and the Tribunal was correct in holding in its favour.

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