TaxTMI 
TaxTMI 
1981 (1) TMI 17
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...., M/s. Charat Ram Shri Dhar Private Ltd. Besides, ten minors were admitted to the benefits of the partnership. The ITO took objection to the clause, in the instrument of partnership deed, providing for the contribution of capital or in default the liability to pay interest by the minors who were admitted to the benefits of the partnership. According to the ITO, the terms and 'conditions for the minors being admitted to the benefits of the partnership had not been assented to by the guardians in the instrument of partnership itself or by separate agreement at the time the partnership came into existence and these made the partnership invalid. Another objection of the ITO was that 49.80% of the profits were for the minors who had been admitted to the benefits of the partnership even though none of the guardians of the minors had contributed any capital on behalf of the minors and the minors were also incapable of doing any work in the conduct of the business of the firm. He, therefore, also held that the firm was not genuine. The assessment was, therefore, made in the status of an association of persons and the assessee's claim for registration was refused. Against this action of ....
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....red. The other points urged before the Tribunal were not pressed before us. It may be pointed out in this connection that the Tribunal was of the view that the minors were not and could not be partners and as such in such circumstances if the guardians of the minors had not signed the deed that by itself did not invalidate the deed. There was no dispute as to the fact that the guardians had signed the statement of accounts and had received the ad interim shares of profits attributable to the shares of the minors. Such conduct, on the part of the (guardians of the) minors, according to the Tribunal, was sufficient evidence to show that they had assented to the terms on which the minors had been admitted to the benefits of the partnership. Before the AAC the affidavits of these guardians, each one expressly declaring that he was fully aware of the provisions of the deed of partnership and had assented to the same as guardians of the minors and in full awareness of the same he had accepted the same partnership on behalf of the minors, had been filed. In spite of all these facts, it is contended by Mr. Pal that some evidence of such acceptance by the guardians must be incorporated in t....
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....amlal Murlidhar v. CIT [1930] 5 ITC 150; AIR 1931 Cal 682 Chief justice Rankin, speaking for the court, was of the opinion that a partnership to be valid does not require its terms to be embodied in an instrument. Moreover, a defective instrument may be supplemented by other evidence such as the conduct of the partners to establish and define those terms. But the Indian I.T. Act, 1922, and the Rules framed thereunder made provision for the registration of those firms only that are constituted under instruments of partnership and of no other firms. It is implied, in the opinion of his Lordship, that only a complete instrument was intended to be valid for registration, that is to say, an instrument which did not require supplementation by other evidence, but contained in itself the complete agreement constituting the partnership and by itself solely operated to create a partnership. His Lordship did not mean to say that an instrument of partnership must consist of one document only. In this case (in 5 ITC), had the 4th partner signified in writing his acceptance of the terms of the partnership, the two documents together might have been held to constitute a complete instrument of par....
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....& Sons v. CIT [1952] 22 ITR 264, construed it as having admitted the minors only to the benefits of the partnership. It accordingly held that the assessee was entitled to be registered. Thus, in the opinion of their Lordships, the partnership deed, reasonably construed, only conferred the benefits of the partnership on the two minors and did not make them full partners. The guardian had agreed to certain clauses in order to effectuate the decision of the major members to confer the benefits of the said partnership to the minors. With reference to that decision, Mr. Pal argues that the guardian had also the power to accept the conditions on which the benefits of partnership were being conferred and such power must be evidenced from the terms and conditions of the deed itself. But there is no warrant for such a proposition in the decision referred to above. Mr. R. N. Bajoria, learned advocate for the assessee, in order to support his contention, that it was not necessary for every partner to sign the instrument of partnership and even if the instrument of partnership had been signed by only some of them, if it had been assented to by the others, who had not signed it, and they had....
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....ced here that the Allahabad High Court in Addl. CIT v. United Commercial Traders [1978] 112 ITR 953, was of the view that the mere fact that the minor did not sign the partnership deed would not disentitle the firm from getting registration. The Special Bench decision of the Calcutta High Court in the case of Ramlal Murlidhar v. CIT [1930] 5 ITC 150, corresponding to AIR 1931 Cal 682, was followed. In the light of these decisions we would like to consider the decision of the Full Bench of the Allahabad High Court in the case of Addl. CIT v. Uttam Kumar Pramod Kumar [1978] 115 ITR 796. In this case, a deed of partnership showed that the partnership purported to consist of four partners, two of whom were minors. The minors were treated on a par with the majors. The fact that they were minors was not even mentioned. They were not only entitled to share the profits but were liable to share losses as well. It was apparent that they had financed the business. The minors did not sign the partnership nor did any one else, acting as their guardian or otherwise, sign the deed on their behalf On the question whether the firm was entitled to registration, it was held that the document in quest....