1982 (3) TMI 91 - AT - Income Tax

Summary

Issues:
1. Delay in filing appeals
2. Cancellation of registration of a firm under section 186(1) of the Income-tax Act, 1961
3. Inclusion of minors in the total number of partners for the purposes of section 11(2) of the Companies Act
4. Interpretation of the term "person" under the Companies Act, 1956

Analysis:

1. Delay in filing appeals:
The appeals were filed after a delay, and the counsel for the assessee argued that the delays were due to postal reasons, which were considered reasonable, and thus, the delays were condoned.

2. Cancellation of registration of a firm under section 186(1) of the Income-tax Act, 1961:
The firm's registration was initially granted but later canceled by the ITO due to the firm having more than 20 partners and lacking the guardians' signatures of the minor partners on the partnership deed. The Commissioner (Appeals) upheld the cancellation based on the number of partners but disagreed on the lack of guardians' signatures, citing a circular allowing amendment of the partnership deed. The Tribunal upheld the Commissioner's decision on this issue.

3. Inclusion of minors in the total number of partners for the purposes of section 11(2) of the Companies Act:
The assessee contended that minors admitted to the benefits of partnership should not be counted towards the total number of partners. The Tribunal agreed, citing relevant legal provisions and precedents, concluding that minors should not be considered in determining the limit of 20 persons under section 11(2) of the Companies Act.

4. Interpretation of the term "person" under the Companies Act, 1956:
The Tribunal analyzed the definition of "person" under the Companies Act, the Partnership Act, and the Income-tax Act to determine whether minors should be included in the count of partners for a firm. It concluded that, in the context of partnership, minors should not be considered as partners, aligning with legal provisions and previous judgments. The Tribunal held that the income-tax authorities were not justified in including minors in the count of partners and canceled the registration of the partnership firm.

In conclusion, the Tribunal allowed the appeals filed by the assessee, holding that minors admitted to the benefits of partnership should not be counted towards the total number of partners, and directed the ITO to provide an opportunity to amend the partnership deed in accordance with the law.