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Issues: Registration of a partnership firm despite a partner being a minor during the major part of the accounting year.
Analysis: The case involved a partnership firm formed by an oral agreement effective from January 1, 1981, for the business of manufacturing veneer. The partnership deed was executed on February 23, 1982. The Income-tax Officer rejected the registration claim due to one partner being a minor during the oral agreement. The assessee argued that as the minor partner had attained majority by the date of the partnership deed, registration should be granted. The Tribunal considered relevant judgments and held that the minor partner was admitted to the benefits of the partnership by the contracting parties who had the capacity to contract. The Tribunal also noted that the firm was not found to be bogus. The High Court emphasized that the Income-tax Officer's jurisdiction is limited to verifying compliance with the law and the genuineness of the firm. The court highlighted the rights of a minor admitted to a partnership under the Indian Partnership Act, stating that a minor, upon attaining majority, can choose to become a partner or repudiate the partnership. Silence after attaining majority is considered an election to become a partner. The Appellate Assistant Commissioner and the Tribunal had concurrent findings on the grant of registration. Despite the Revenue's argument against the plausibility of the explanation accepted by the lower authorities, the court upheld the decision in favor of the assessee. The court answered the referred question affirmatively in favor of the assessee, ruling against the Revenue.
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