TaxTMI 
TaxTMI 
2004 (11) TMI 36
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....to the assessee-firm?" The facts of the case are as follows: The assessee-respondent filed an application for registration of the firm for the year 1974-75 along with the instrument of partnership deed dated September 22, 1973. In the partnership deed the following persons are partners: (1) Badri Prasad 19 paise in a rupee (2) Ganga Ram 25 paise in a rupee (3) Shankar Lal 19 paise in a rupee (4) Jamuna Prasad 25 paise in a rupee (5) Gopi Nath 06 paise in a rupee Besides the above partners one Lakhan Lal (minor) was admitted to the 4 benefits of partnership to the extent of six paise in a rupee and h....
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....was entitled to get the benefit of partnership of six paise in a rupee and the partnership is in consonance with the spirit of section 30 of the Partnership Act. Both learned counsel for the parties have referred to paragraph 5 of the partnership deed, which is re-produced below: "(5) That at the close of each year the accounts of the firm shall be prepared after adjusting all the business expenses and in the case of profit the amount of profit shall be credited to the respective account of each partner according to their shares as specified in para. 3 and in the case of loss the same shall be borne by the partners and the amount of loss shall be debited to their respective accounts according to their shares. Besides this Shri Lakh....
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....he minor would be entitled to share six paise per rupee in the profit and loss of the firm. The contention of the Revenue is that since the minor has been made liable to share the losses also, the minor has been admitted as full-fledged partner in the firm and, as such partnership agreement being void, no registration can be granted to such firm under the Income-tax Act. At this stage it is apt to notice the relevant provision of section 30 of the Partnership Act. Section 30(1) of the Partnership Act provides that a minor may not be a partner in a firm but with the consent of all the partners for the time being, he may be admitted to the benefits of partnership. Sub-section (3) of section 30 of the aforesaid Act provides that such minor's s....
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....id clause. The provision to share the loss by the minor being specific will prevail over the general provisions contained in the deed. Thus in the deed in question the minor has been made liable to share the loss to the extent of his share. The decision in CIT v. Oriental T. Maritime [1997] 227 ITR 244 (AP) lays down that section 30 of the Indian Partnership Act provides that a minor cannot be made liable for the losses of the partnership. If at all a minor should be admitted into the partnership, he should be admitted for the purpose of profits only. In that case the minors were clearly admitted to share in the profit and loss of the firm. In that view of the matter it was held by the Andhra Pradesh High Court that the assessee was not ....
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....roving the view of the Calcutta High Court and the Punjab High Court it was held, that the income-tax authorities cannot make out a new contract between the parties and register document which is different from the one actually executed and ask to be registered. The apex court thus disapproved the view of the Madras High Court holding that the document must be construed as showing only that the minor was admitted not as full partner but to the benefits of partnership. The relevant para, reads as follows: "Section 30 of the Indian Partnership Act clearly lays down that a minor cannot become a partner though with the consent of the adult partners he may be admitted to the benefit of partnership. Any document which goes beyond this section ....
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....osses in the firm. Therefore the facts of that case are not parallel to the facts of the present case. In the case in hand there is a specific provision in clause (5) of the deed that minor would be liable to share the losses of the firm also to the extent of his share with the rider that he shall not be personally liable. Therefore the aforesaid case is distinguishable on facts and has no application to the facts of the present case. The controversy involved presently was not involved therein. For the same reason the case of CIT v. Nand Lal Jagdish Prasad [1997] 226 ITR 312 (All) is distinguishable. In that case it was provided in the deed that minor shall be entitled to share the profit of the firm but shall not be liable for the losses e....