1990 (7) TMI 164 - AT - Income Tax

Summary

Issues:
- Registration of the assessee-firm for the assessment year 1981-82
- Claim of benefit of continuance of registration for subsequent assessment years
- Validity of partnership deed involving a minor partner

Analysis:
The judgment involves five appeals by the Revenue challenging the order of the AAC of IT, Range-VIII, New Delhi, regarding the registration of an assessee-firm for the assessment years 1981-82 to 1985-86. The primary issue revolves around the refusal of registration to the assessee-firm for the base year 1981-82 by the ITO, which led to a denial of the benefit of continuance of registration for the subsequent years. The AAC of IT allowed the registration for 1981-82 and extended the benefit of continuance for the following years. The Revenue, dissatisfied with the AAC's decision, appealed before the Appellate Tribunal.

The crux of the matter lies in the interpretation of the partnership deed involving a minor partner. The ITO contended that the clause in the partnership deed, allowing the minor to become a full-fledged partner upon attaining majority, was against the provisions of the Contract Act. The ITO deemed the partnership invalid due to the minor's inclusion and subsequently refused registration. However, the assessee argued before the AAC that the minor partner signed the deed after attaining majority, supported by an affidavit. The AAC, siding with the assessee, held that the minor's inclusion did not violate the Contract Act as the major partners were competent to contract and admitted the minor to the benefits of the partnership.

The Tribunal concurred with the AAC's decision, emphasizing that the original partnership deed was not signed by the minor and that the minor's signature upon attaining majority was supported by an affidavit unchallenged by the Revenue. Therefore, the Tribunal upheld the validity of the partnership and the benefit of continuance of registration for the subsequent assessment years. Consequently, all appeals by the Revenue were dismissed, affirming the AAC's order in favor of the assessee-firm.