Admission of minors to the benefit of partnership duly witnessed by guardian or someone authorised in this behalf before the partnership deed. - Income Tax - 938/CBDT

INSTRUCTION NO. 938/CBDT Dated : March 19, 1976 Section(s) Referred: 185 Statute: Income - Tax Act, 1961 Reference is invited to the decision of the Allahabad High Court in the case of Uttam Kumar Pramod Kumar that admission of minors to the benefit of partnership must be duly witnessed by the guardian or someone duly authorised in this behalf before the partnership deed can be accepted as valid. 2. This decision is normally to be followed not only in the Commissioner's charges falling within the jurisdiction of the Allahabad High Court, but also in other Commissioners' Charges and further it will not only be for the future but it would apply with equal force to the past assessments also and remedial action would become necessary, if the principles laid down are rigidly applied in all such cases. So far it has been taken that where a minor is admitted to the benefits of Partnership, it was not necessary for such admission to be evidenced by any body on behalf of the minor and even, if it was so evidenced in view of the Supreme Court's decision in Mohanlal Sadhu Ram's case (57 ITR 415) it would not amount to the minor being admitted to the partnership unreservedly. To reverse what has happened in the all completed cases would raise practical problems. 3. In view of the practical difficulties involved, the Board have examined the question of following the decision of Allahabad High Court both for completed and pending assessments. The Board is of the view that it was not desirable to disturb completed assessments by cancelling registrations already granted. An opportunity should be given to the concerned assessees to make necessary attestations or to amend the partnership deeds and where the needful was not done, steps should be taken to cancel registration. 4. It has also been decided by the Board that if any action to cancel registration was required, necessary action should be taken under section 263 of the Income-tax Act, 1961. However, if it was not possible to take recourse to section 263 of the Income-tax Act, 1961, action might be taken under sections 154/186 of the Income-tax Act, 1961. 5. The Board have also decided that in so far as pending assessments are concerned, an opportunity may be given to amend the partnership deed and if done so, the registration will not be refused on this ground. 6. Necessary instructions may please be issued to all the officers working in your charge on the above lines.