TaxTMI 
TaxTMI 
1992 (7) TMI 48
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....ome-tax Officer refusing registration. Further appeals of the assessee were allowed by the Appellate Tribunal on the ground that the lower authorities having admitted that the guardians acted as representative assessees for the minors, fell into an error in concluding that the minors were partners and that they were made to share losses, if any, incurred by the firm. The Tribunal further held that the guardians are the partners of the firm having necessary authority to become such partners on behalf of their wards and as the partnership was found to be genuine and without any defect in the partnership deed, the assessees were entitled to registration. On the above facts, the Appellate Tribunal has referred the following question of law for the court's opinion : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the guardian of a minor can be treated as a partner of the firm by obtaining relevant authority to become a partner from such ward and whether such a provision would not amount to a minor partner sharing losses in contravention of the requirements of a valid partnership eligible for registration ? " ....
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....----------------------------------------- 01. Mrs. Sonubai w/o Sakalchand Shah 2% 02. Mrs. Asmita w/o Ashok Shah 4% 03. Mrs. Vijayamala w/o Vinod Shah 4% 04. Mr. Vijay Vasantrao Shah 10% 05. Mr. Shirish Shantilal Shah 5% 06. Mrs. Ratnabai w/o Surendra Mirji 5% 07. Mr. Balasaheb Dharmappa Mirji 25% 08. Mrs. Seema w/o Shailesh Shah 5% 09. Mr. Rajkumar Manickchand Shah 10% 10. Mr. Ramesh Manickehand Shah 10% 11. Mr. Shashikant Surendra Mirji 11% 12. Mr. Ashok Surendra Mirji 11% " ------------------------------------------------------------------------------------------------------------------------------------------------- Clause 14(a) is another significant clause which states that " the death or retirement or insolvency of any partner shall not dissolve the partnership but such partner shall cease to be a partner on the happening of such event". On behalf of partners at Sl. Nos. 9 to 12, the guardians have signed as representatives of their minor children. The answer to the question, in our opinion, ultimately depends upon the correct interpretation of the partnership deed itself. The scope of powers of the guardian of a mino....
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.... by the Tribunal are as under ( headnote ) : " The benamidar of a partner, qua the other partners, has separate and real existence ; he is governed by the terms of the partnership deed ; his rights and liabilities are governed by the terms of the contract and by the provisions of the Partnership Act ; his liability to third parties for the acts of the partnership is co-equal with that of the other partners ; the other partners have no concern with the real owner ; they can only look to him for enforcing their rights or discharging their obligations under the partnership deed. Any internal arrangement between him and another partner is not governed by the terms of the partnership ; that arrangement operates only on the profits accruing to the benamidar ; it is outside the partnership arrangement. If a benamidar possesses the legal character to enter into a partnership with another, the fact that he is accountable for his profits to, and has the right to be indemnified for his losses by, a third party or even by one of the partners does not disgorge him of the said character. " It is significant to note that in the said case the benamidars were representing third parties ( not ....
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....ere a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted only to the benefits of partnership. The rules which have been framed under section 26A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits of partnership would be competent to sign such an application. The definition is designed to confer equal benefits upon the minor by treating him as a partner ; but it does not render a minor a competent and full partner. For that purpose, the law of partnership must be considered, apart from the definition in the Income-tax Act. 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 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 docu....