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Issues: Whether the assessee-firm was entitled to renewal of registration for the assessment years 1960-61 and 1961-62 when the partnership deeds stated that minors were admitted to the benefits of the partnership and provided for sharing of profits and losses in proportion to their shares.
Analysis: The partnership deeds, read as a whole, showed that the minors were not intended to be made full partners but were only admitted to the benefits of the partnership. A clause providing for profits and losses to be divided in proportion to share did not by itself create personal liability on the minors. Under section 30(3) of the Indian Partnership Act, 1932, a minor admitted to the benefits of partnership may have his share liable for the acts of the firm, but cannot be personally liable. Since no personal liability was imposed, the deed was not inconsistent with the statutory position and the refusal of registration could not stand.
Conclusion: The assessee-firm was entitled to registration renewal; the answer was in the negative against the department and in favour of the assessee.
Ratio Decidendi: A partnership deed does not bar registration merely because it provides for a minor admitted to the benefits of partnership to bear profits and losses according to share, so long as the deed does not impose personal liability on the minor.
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