TaxTMI 
TaxTMI 
1968 (2) TMI 32
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....Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee-firm constituted under the deed of partnership dated February 25, 1953, was entitled to registration and in setting aside the order of the Commissioner under section 33B of the Indian Income-tax Act, 1922? (iii) Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax could in law invoke jurisdiction under the provisions of section 33B of the Indian Income-tax Act, 1922, after the aforesaid Act had been repealed by section 297 of the Income-tax Act, 1961? " So far as the third question is concerned, the matter is now concluded by a decision of the Supreme Court in the case of Kalawati Devi Harlalka v. Commissioner of Income-tax. It has been held by their Lordships that the Commissioner had jurisdiction to issue the notices under section 33B of the Act of 1922, in view of section 297(2) of the Act of 1961, and paragraph 4 of the Income-tax (Removal of Difficulties) Order, 1962. It has been further held that section 297(2)(a) of the Income-tax Act, 1961, includes within its scope a proceeding under section 33B of the Indian Inc....
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....of this clause 15 of the earlier deed that on the death of Banarshilal Bajaj, his widow, Tribeni Debi, joined as the fourth partner of the firm. The fact that she has signed the document for self and on behalf of her only minor son, Gobindram Bajaj, would not affect her individual position in the partnership. She has joined the partnership as the fourth partner and she may be accountable to the minor for the profits she has earned out of the partnership. This automatically does not make the minor, Gobindram Bajaj, as a fifth partner in the partnership. Section 4 of the Indian Partnership Act defines "partnership" as a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm ". Under section 5 of the same Act, the relation of partnership arises from contract and not from status. Section 30 of the said Act may also be noticed: " 30. (1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but with the consent of all the partners for the time being, he ....
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....ys down that a minor cannot become a partner, though with the consent of the adult partners, he may be admitted to the benefits of partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the income-tax authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the income-tax authorities to register a document which is different from the one actually executed and asked to be registered. " This decision does not come to the aid of the learned counsel inasmuch as the instrument in the present case clearly shows that the document is between the four persons mentioned therein. As has been stated above, there is no basis for holding on the recitals of the document that the minor was also admitted into the partnership, and hence cannot be deemed to be a partner under section 2(6B) of the Indian Income-tax Act. The learned counsel next draws our attention to the following observations of their Lordship o....
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....ment, as the case may be. " Their Lordships held: " That the firm was entitled to be registered under section 26A. The shares given to A and B in the partnership deed were correct according to the terms of the partnership deed although A and B were answerable for the profits pertaining to their shares to the divided members of the family. The partition in the family allotting specific shares to its members might have affected the accountability of the two partners to the other members of the family, but did not affect in any way their relationship with the other partners, qua the partnership, or the validity or genuineness of the partnership. Therefore, the Commissioner was wrong in cancelling the registration. " The learned counsel for the respondent has also drawn our attention to another decision of the Supreme Court in the case of Commissioner of Income-tax v. A. Abdul Rahim and Co., and relied on the following passage: " When a firm makes an application under section 26A of the Act for registration, the Income-tax Officer can reject the same if he comes to the conclusion that the partnership is not genuine or the instrument of partnership does not specify correctly the ind....