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TMI Blog1977 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... sharing ratios between the partners was as follows: Name of the parter Share in profit Share in loss 1. Sri Notandas 6% 8% 2. Sri Amarnath 4% 4% 3. Sri Udey Kumar 4% 4% 4. Sri Navin Kumar 2% Nil The partnership was at will. It is common ground that the aforesaid partnership deed was registered in terms of s. 185(1) of the IT Act, 1961, and that the aforesaid registration was continued by the IT authorities in respect of asst. yrs. 1969-70, 70-71, 71-72 and 72-73. On22nd July, 1971, the minor became major. On his attaining majority, the firm did not execute fresh partnership deed immediately. In respect of asst. yr. 1972-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, the firm is not entitled to registration". 2. The aforesaid order was appealed against and it was submitted before the AAC that there was no change in the constitution of the partnership, or in the profit sharing ratios; that the new deed was only a formality necessitated by the attainment of majority by Sri Naveen Kumar that the partnership deed was operative from the commencement of the accounting year and there was no necessity to specifically mention the retrospective effect. It was also argued that the erstwhile minor had become a partner of the firm in terms of the Proviso to sub-s. (5) of s. 30 of the Indian Partnership Act, 1932. As he had failed to notify his disassociation with the firm within six months from the date of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame reflects the correct relationship amongst the partners, which had subsisted amongst them all the years round. It merely formalized what had existed in law from the dated on which the period of 6 months after the dated of the attaining the majority expired. This point was also evident from the fact that the books of account of the firm continued to be the same during the entire year. The learned AAC was, according to the assessee, wrong in presuming that a new firm was brought into existence by the partnership deed dated30th Aug., 1972. What the deed did, in facts, was to reduce to writing the existing relationship amongst the partners. So long as this relationship covered the entire year, the firm was liable to be registered even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor, on becoming a full fledged partner in the firm, in accordance with the proviso to sub-s. (5) of s. 30 shall have the same share in the property and profits of the firm to which he was entitled to 2 per cent share in the profits of the firm as a minor; he had no obligation to share in the losses of the firm. Does the law stipulated that the minor even on attaining majority, and becoming a partner in the firm continue to share the above advantage and not share in the losses? This does not appear to be the position. According to their Lordships of the Supreme Court (See the case of Mandyala Govindu Co. vs. CIT(1) any indication to the contrary, where the partners have agreed to share the profits in certain proportions, the presumption i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmalised the position as it had existed from22nd Jan., 1972onwards in law as contained in sub-s. (7) of s. 30 of the Indian Partnership Act. When such a partnership deed is offered for registration, can registration be refused on the ground that part of the accounting period is not covered by a formal deed, though the profit-sharing ratios as mentioned in the deed, existed during the entire accounting period ? In our opinion, the answer to this question has to be in the negative. It is not the requirement of s. 184(1) of the IT Act, 1961 that the partnership deed must be executed on the first day of the accounting period. Registration has to be granted even if the partnership deed has been executed later in the course of the accounting year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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