TaxTMI 
TaxTMI 
1996 (5) TMI 66
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case, the Tribunal was justified in holding that the Form No. 11 filed along with the deed was defective and if so whether the said defect is rectifiable under the provisions of section 185(2) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in reversing the order of the Appellate Assistant Commissioner granting registration of the firm ? " The Income-tax Officer, A-Ward, Digboi, while passing the order under section 185 found that the assessee-firm was constituted by a deed of partnership dated February 23, 1978, with three partners, namely, (1) Shri Jogendranath Deka ; (2) Shri Dhiren Deka ; and (3) Shri Jiten Deka. Shri Khanin Deka, minor son of Shri J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ineness of the firm, agreeing with the contentions of the assessee to the effect that the information contained in the application for registration carried sufficient relevance for the purpose of determining the genuineness of the firm and the same should not be ignored. Accordingly, the Income-tax Officer was directed to allow registration. The Revenue preferred an appeal before the Income-tax Appellate Tribunal contending, inter alia, that the Appellate Assistant Commissioner was wrong in directing registration of the firm under the facts and circumstances of the case. The Appellate Tribunal after hearing the matter held that a minor could be made liable to share losses of the firm to the extent of his share in the firm as per the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... declined to draw up a statement of case for reference to this court under section 256(1). The assessee, therefore, moved this court under section 256(2) in Civil Rule No. 3(M) of 1986 and this court directed the Tribunal to make the reference. We have heard learned counsel for the parties. Before we consider the rival contentions of the parties, it will be apposite to examine the deed of partnership and also to look to some of the relevant provisions of the Indian Partnership Act as well as the Income-tax Act. We find the deed of partnership at pages 36 to 39 of the paper book. In the said deed, it has been recited as under : "Be it noted here that Sri Khanin Deka, son of Sri J. N. Deka, resident of Doom Dooma, P. O. Doom Dooma P.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... valid. However, a minor cannot be made liable for any loss as long as the partnership deed does not make the minor a full partner. A partnership deed cannot be regarded as invalid on the ground that a guardian has entered into a contract on behalf of the minor. However, if all the partners including the minor are made liable for both profits and losses by a deed of partnership such deed cannot be said to be valid. The Supreme Court in CIT v. Shah Mohandas Sadhuram [1965] 57 ITR 415 ; AIR 1966 SC 15 held thus (headnote of AIR 1966 SC) : "Where in a partnership deed a recital expressly stated that it was the major members who had decided to constitute the partnership and admit the minors to the benefits thereof, the rest of the clauses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, Shri Khanin Deka, minor son of Sri J. N. Deka, was admitted to the benefits of the partnership with such shares of profits as has been provided in this, instrument with all the rights and liabilities as per section 30 of the Indian Partnership Act. In clause (5) of the deed of partnership it has been recited that the profits and losses of the partnership business shall be divided and borne by the parties in equal proportions after adjustment of all expenses of the partnership business. Therefore, it is evident that the intention of the parties was to admit Khanin Deka to the benefits of the firm with the rights and liabilities as per section 30 of the Partnership Act. In the said clause, it is abundantly made clear that the minor was ....