TaxTMI 
TaxTMI 
TaxTMI 
1981 (7) TMI 137
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....ogesh Kumar, one of the minors admitted to the benefits of partnership, attained majority on 14th March, 1973. The assessee's accounting year was Diwali Year and the relevant accounting year for asst. yr. 1974-75 is the period from 6th November, 1972 to 25th October, 1973. Shri Yogesh Kumar did not issue any public notice of either electing to continue as a partner or opting out of the partnership within six months, or for that matter even later, of his attaining majority. Admittedly, he became a partner by virtue of proviso to sub-s. (5) of u/s. 30, which reads, "provided that if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months". Six months expired on 14th September, 1973, which also ....
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....969 which did not consider a fresh deed necessary before renewal of registration is allowed. It was also contended that Audit objection could not form the basis of jurisdiction. The CIT (Appeals) accepted the assessee's argument on all the counts. He found in favour of the assessee both on the question of jurisdiction and merits. 3. In the departmental appeals, the decision of the Allahabad High Court in the case of Bhagat Shyam & Co. vs. CIT (1980) 123 ITR 164 (All) is cited as an authority in justification of the ITO's order. According to these grounds, there was no operative deed from 14th March, 1973 to 1st July, 1975 and that the absence of such operative deed justified the cancellation of the continuation of registration ordered by t....
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.... of six months of his attaining majority. The partnership deed read with this clause, he pointed out, clearly showed that the profit sharing ratio, both in times of profits as well as losses, continued to remain the same. Under the circumstances, he claimed that there was no basis for holding that there was anything wrong on the part of the assessee in not having a fresh partnership deed. He pointed out to a Board's circular dt. 3rd January, 1962 which directed the ITOs not to refuse registration merely on the ground that there was new partnership deed on a manor admitted to the benefits of partnership becoming a fullfledged partner on attaining majority. It also appears that the Board reiterated its view in its further circular dt. 20th Ma....
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.... on 1st July, 1975 w.e.f. 14th November, 1974 no longer extends to Shri Yogesh Kumar relief from losses and that if projected to the date of his attaining majority or six months later make the earlier deed as well as the devision different from what should have been the real agreement. This according to him, justified the inference of non-genuineness. 5. We have carefully considered the facts as well as the arguments. We will deal with the merits first. Shri Yogesh Kumar attained majority on 14th March, 1973 and became a partner by virtue of s. 30 of the Indian Partnership Act w.e.f. 14th September, 1973, both dates falling in the accounting year ending on 25th October, 1973 relevant for asst. yr. 1974-75. There was no new deed till 1st Ju....
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....s between the adult partners was unequal. The presumption raised in s. 13 (b) of the Indian Partnership Act as to equal rights where there is no specification of shares could not also help the assessee because of unequal shares in profits. Since the Income-tax law required that the share of the partners, both in profits and losses, had to be defined, the Supreme Court found that the assessee, in that case, was not eligible for registration. It is not so in the present assessee's, case. Cl. 8 of the partnership deed clearly defined the share of losses between the adult partners and hence there was no uncertainty as to the precise profit sharing ratios in respect of losses when this deed is r/w s. 30(7) of the Indian Partnership Act, 1932. Th....