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TMI Blog1968 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ebi was not a partner in a dual capacity and as such the deed of partnership was not invalid ; (d) that Smt. Tribeni Debi and her minor son, Sri Gobindram Bajaj, had not been made partners jointly and that their individual shares were not required to be specified ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee-firm constituted under the deed of partnership dated February 25, 1953, was entitled to registration and in setting aside the order of the Commissioner under section 33B of the Indian Income-tax Act, 1922? (iii) Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax could in law invoke jurisdiction under the provisions of section 33B of the Indian Income-tax Act, 1922, after the aforesaid Act had been repealed by section 297 of the Income-tax Act, 1961? " So far as the third question is concerned, the matter is now concluded by a decision of the Supreme Court in the case of Kalawati Devi Harlalka v. Commissioner of Income-tax. It has been held by their Lordships that the Commissioner had jurisdiction to issue the notices under section 33B of the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that in case of death of any of the partners, there will be no dissolution of the firm and in the event of any death of any of the partners, the heirs or legal representatives of the deceased partner shall have the option for joining in the partnership. It is in pursuance of this clause 15 of the earlier deed that on the death of Banarshilal Bajaj, his widow, Tribeni Debi, joined as the fourth partner of the firm. The fact that she has signed the document for self and on behalf of her only minor son, Gobindram Bajaj, would not affect her individual position in the partnership. She has joined the partnership as the fourth partner and she may be accountable to the minor for the profits she has earned out of the partnership. This automatically does not make the minor, Gobindram Bajaj, as a fifth partner in the partnership. Section 4 of the Indian Partnership Act defines "partnership" as a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm ". Under section 5 of the same Act, the relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to confer equal benefits upon the minor by treating him as a partner ; but it does not render a minor a competent and full partner. For that purpose, the law of partnership must be considered, apart from the definition in the Income-tax Act. Section 30 of the Partnership Act clearly lays down that a minor cannot become a partner, though with the consent of the adult partners, he may be admitted to the benefits of partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the income-tax authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the income-tax authorities to register a document which is different from the one actually executed and asked to be registered. " This decision does not come to the aid of the learned counsel inasmuch as the instrument in the present case clearly shows that the document is between the four persons mentioned therein. As has been stated above, there is no bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the partners represents, cannot enforce their rights against the other partners nor can the other partners do so against the said third parties. Their right is only to a share in the profits of their partner-representative in accordance with law or in accordance with the terms of the agreement, as the case may be. " Their Lordships held: " That the firm was entitled to be registered under section 26A. The shares given to A and B in the partnership deed were correct according to the terms of the partnership deed although A and B were answerable for the profits pertaining to their shares to the divided members of the family. The partition in the family allotting specific shares to its members might have affected the accountability of the two partners to the other members of the family, but did not affect in any way their relationship with the other partners, qua the partnership, or the validity or genuineness of the partnership. Therefore, the Commissioner was wrong in cancelling the registration. " The learned counsel for the respondent has also drawn our attention to another decision of the Supreme Court in the case of Commissioner of Income-tax v. A. Abdul Rahim and Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quoted : " Held, on an interpretation of the deed, that the intention disclosed by the deed was that L was to be a partner. He was described as manager and he signed the document in that capacity but it was not thereby sought to bring into existence a relationship of partners between his family and the other members described as the second party. The signature of L who signed the documents 'for and on behalf of (the family) manager and karta' only indicated that he was acting as manager of the family in entering into the partnership agreement. He was not thereby seeking to make the members of the family partners of the firm. The partnership agreement was between L on the one hand and the named persons on the other and the fact that originally L was the karta of the family and that joint family had later ceased to exist by reason of partition did not affect the validity of the partnership or its continuance. L being the contracting party, the application for registration could not be rejected because the other members of the family did not sign the application for renewal of registration of the firm for the year 1950-51. " It is, therefore, firmly established that once the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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