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1976 (4) TMI 72

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..... 25% 4. Sri Sureshchand 121/2% (Minor) admitted to the benefits of partnership. 5. Sri Rameshchand 121/2% (Minor) admitted to the benefits of partnership In case of losses, it was provided by clause 4 of the deed that "Svs. Sureshchand and, Rameshchand shall not share in loss as they are minors. The remaining partners shall bear the loss in their profit sharing ratios." 2. The accounting period of the assessee ended every year on Diwali. For asst. yr. 1972-73, Diwali fell on 19th Oct., 1971. On the basis of the aforesaid partnership deed the initial registration was granted to the firm in respect of the previous year ending on Diwali, 1969, corresponding to asst. .....

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..... reference is made to Partnership Act, s. 30 sub-ss. 5 and 7. In this case the minor Suresh Chand attained majority and did not opt to give public notice............" 3. The ITO took the view on these facts that Sri Sureshchand had become major during the accounting period corresponding to asst. yr. 1971-72 and inasmuch as a new partnership deed had not been executed after his having attained majority, the firm was not constituted as per the partnership deed dated 16th July, 1969 during the entire accounting period ending on Diwali, 1970 and, therefore, refused registration to the assessee firm in respect of asst. yr. 1971-72. Similar was the position in respect of asst. yr. 1972-73. On appeal the AAC allowed registration in respect of bo .....

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..... rresponding to asst. yr. 1971-72 also and, therefore, there was no occasion for the ITO to have rejected the registration in respect of asst. yr. 1971-72. 6. In respect of asst. yr. 1972-73, it is pointed out that the accounting period had ended on 19th Oct., 71. By this date the period of 6 months stipulated under sub-s. (5) of s. 30 of the Indian Partnership Act enabling the minor to elect to be a partner or to opt out of it had not expired and, therefore, till this date i.e. 19th Oct., 1971, there was no need for a new partnership deed being executed for the partners including Sri Sureshchand would till the period of 6 months commencing from the date of attaining majority be governed by the terms of the deed of partnership dated 16th J .....

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..... main minor, the losses sharing ratio of the major partners including Sureshchand now would not be the same as were indicated in the partnership deed dated 16th July, 1969, for, according to the said partnership deed, it was 25 per cent loss pertaining to two minors which was being shared by the three major partners equally, but, after attaining of majority by Sri Sureshchand, it would be only 121/2 per cent loss, which would have to be shared not by three major partners, as hitherto but by the four partners, who would inter se, have un-equal shares, and therefore, the decision of the Hon'ble Supreme Court in the case of Thelibai F. Jain Others vs. ITO(1) would directly hit the case and the authorities below were, therefore, right in havin .....

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..... inference of the ITO that Sri Sureshchand had attained majority during the previous year for the reason that he had signed the Form No. 12 on 30th June, 1971 was not correct. The assessee was taken in by the suggestion of the ITO, and without striving to place on record, the correct facts regarding the date of attaining majority by Sri Sureshchand, he proceeded on the alternative presumption that, in any, case, on account of the provisions of s. 30(5) of the Indian Partnership Act, the firm was entitled to registration and, then, the assessee had, in the background of its mind, the contents of the circular of the CBDT being No. F/No. 25/35/61-IT (A-I) dated 3rd Jan., 1962, directing that, in the circumstances as were prevalent in the case o .....

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..... yr. 1971-72 on 30th June, 1971. According to the present admission made by the assessee and the evidence tendered Sri Sureshchand had become major on that date. His signing the Form No. 12 is, thus, explained. But from this fact alone it is not possible for us to draw the inference that Sri Sureshchand become major during the accounting period ending some time in October, 1969. As the entire decision in this case hinges on this crucial finding, it has to be established after due enquiries. As at present there is no evidence whatever on record on this point, we are, therefore, of the opinion that this gap in the evidence must be made good to enable the court to give a correct finding on the crucial issue. If it is proved, ultimately, that Sr .....

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