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TMI Blog1980 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership deed, however, described all the three parties as partners and cl. 4 of the partnership deed provided that the profits and losses in the business shall be distributed and shared between the partners in equal shares. The ITO, relying upon the decision of the Supreme Court in the case of CIT vs. Dwarka Dass Khaitan and Co. (1) held that the partnership was void as a minor had been taken as a full fledged partner which was contrary to the provisions of s. 11 of the Contract Act, 1872. When this was brought by the ITO to the notice of the assessee, the assessee filed a rectification deed dt12th Feb., 1974of partnership on5th March, 1976. In the said rectification deed the minor, Shri Rakesh Kumar Gupta was again shown a partner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original deed of partnership the minor had been shown as the third party due to a technical mistake and the intention of the parties was not to make full fledged partner. It was also explained that the deed was signed on behalf of the minor, by his father and not by the minor. It was further explained that on these facts the minor could not be said to be a party to the contract and, therefore, there was no contravention of the provision of s. 11 of the contract Act, 1872. It was contended that for this reason the decision of the Supreme Court in the case of Dwarka Dass Khaitan was not applicable. For the assessee it was also contended that the word "minor" after the name of Shri Rakesh Kumar Gupta stood for a specific qualification which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Departmental Representative placed strong reliance on the orders of the authorities below. Shri I.S. Verma also placed reliance upon the decision dt.11th Aug., 1976of theCuttackBench of this Tribunal in M/s. Radha Raman Chandra vs. ITO (4). 5. We have carefully considered the rival submission made on behalf of both the parties. It is necessary first of all to notice the decision of the Supreme Court in the case of Dwarka Dass Khaitan. In that case an instrument of partnership had been executed on27th March, 1946between four person one of whom was a minor. The minor was admitted as a full fledged partner and he was also a signatory to the instrument though his natural guardian also signed it. Not only was he entitled to share in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership deed in which the minor was admitted as a full partner was not valid. In the present case a rectificatory deed was executed on12th Feb., 1974. Another point which requires to be noticed is that the AAC's observations that the rectificatory deed was executed after the ITO noticed the defect is not correct. The rectification deed was executed on12th Feb., 1974and it is only that it was filed before the ITO on5th March, 1976. Regarding the delay in filing the same, the assessee had submitted that the rectification deed could not be filed due to oversight alongwith the application for registration. Yet another fact which requires to be noticed is that although the rectification deed was filed on5th March, 1976, that was beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection is concerned, it is relevant to notice. The definition of "partner" in s. 4 of the Partnership Act, 1932 r/w s. 2(23) and s. 30(1) of the IT Act, 1961 and Partnership act respectively, according to which a minor admitted to the benefits of partnership is also included. Therefore if a harmonious construction were to be applied, the view could be taken that in the facts and circumstances of partnership with reference to the minor only means benefits of partnership. In this connection the decision of theCalcuttaHigh Court in Narain Parshad Vijai Bhargava vs. CIT(2), is pertinent. This is also clear from the recital in para 4 of the partnership deed (as rectified) according to which the loss in the business shall be shared equally (fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors were to liable for the losses of firm. However, the ITO refused the grant of registration to the firm and held that an agreement rectifying mistake in the original deed could not validate any invalid deed. The AAC also held that once the partnership deed became invalid, a subsequent rectification of the terms of that deed could not validate the same hence confirmed the order of the ITO. On further appeal, the Tribunal held that the defect found in the original deed was only a technical defect and that technical defect alone would not be sufficient to hold that a genuine firm was not in existence during the year. The Tribunal held that since the rectificatory deed clearly provided that the minors would not share the losses of the firm an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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