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TMI Blog1969 (10) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ajors whereas the fifth partner consisted of three brothers, namely, Mohinder Paul, Harish Chander and Romesh Chander, minors, and the sixth partner, another minor, Surrendar Kumar. The deed stated the shares of the partners as below : (1) Kishore Chand ... 1/5th (2) Ramji Das ... 1/5th (3) Dayal Chand ... 1/5th (4) Roshan Lal ... 1/5th (5) Mohinder Paul, Harish Chander, and Romesh Chander ... 1/10th (6) Surrendar Kumar ... 1/20th (7) Kaushalya Devi ... 1/20th So the fifth partner consisting of three minor brothers had one-tenth share and the sixth partner, Surrendar Kumar, minor, had one-twentieth share. The partnership deed was executed and signed on behalf of the three minors, partner 5 by their uncle Kishore Chand, partner 1, and on behalf of minor, partner 6, by his mother Kaushalya Devi, partner 7. The assessee-firm had been registered under section 26A of the Indian Income-tax Act, 1922 (Act 11 of 1922), for and up to the assessment year 1952-53, but when an application for registration for the assessment year 1953-54 was made on behalf of the firm on June 8, 1953, to the Income-tax Officer, it was signed by partners 1 to 4 and 7, but not by Mohinder Paul o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer, and on an application under section 66(1) of the Act has referred these three questions for consideration to his court : " (1) Whether, on a true construction of the instrument of partnership, dated December 3, 1947, the Tribunal was right in holding that minors, Mohinder Paul, Harish Chander and Romesh Chander, were made full-fledged partners and as such the instrument of partnership was void and was not entitled to registration ? (2) Whether the assessee's claim was rightly rejected on the ground that the individual shares of partners, Mohinder Paul, Harish Chander and Romesh Chander were not specified in the instrument of partnership ? (3) Whether registration was rightly rejected on the ground that the application for renewal of registration was not signed by Mohinder Paul ? " This, as stated, arises out of registration of the assessee-firm sought in regard to the assessment year 1953-54. The assessee-firm was reconstituted on October 1, 1953, under the partnership deed, annexure " B " to Income-tax Reference No. 6 of 1964. The only detail that is necessary for the purpose of this reference is that an application was moved by the assessee-firm for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, the particulars contained in the said instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally, and shall be made-- (a) before the income of the firm is assessed for any year under section 23 of the Act, or . . . (c) with the permission of the Appellate Assistant Commissioner hearing an appeal under section 30 of the Act, before the assessment is confirmed, reduced, enhanced or annulled, or . . . " This rule was amended by Notification No. S. R. O. 1953 of November 20, 1952, of the Central Board of Revenue, and in the amended form this rule reads- " 2. Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of section 26A of the Indian Income-tax Act, 1922 (hereinafter in these rules referred to as " the Act "), register with the Income-tax Officer, the particulars contained in the said instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally, or in the case of dissolved firm by all persons (not being minors) who were partners in the firm immedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative with the said notification altered both these provisions in the rule. The first has been altered to require the making of the application before June 30 of the year for which renewal of registration is sought, and the second has been completely deleted. The effect of deletion of the old rule 2(c) has been that the Appellate Assistant Commissioner has now completely lost power to give permission for the making of an application under section 26A of the Act. In the new rule there is a proviso which gives power to the Income-tax Officer to entertain an application made out of time if he is satisfied that the applicant-firm was prevented by sufficient cause from making the application within time. In the present cases the minors who had become majors did not sign the applications so far as these references are concerned for registration of the assessee-firm until some time in 1957. The Income-tax Officer has not found any sufficient cause for entertaining those applications according to the proviso to rule 2 of the Indian Income-tax Rules of 1922. This finding of the Income-tax Officer has never been questioned by the assessee-firm at any stage and it is not the subject-matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital should not meet the total losses. It is this personal liability of the minors, partners 5 and 6, who were admitted only to the benefits of the partnership according to clause 4, that supports the conclusion of the learned Tribunal that the minors were in fact made substantial partners contrary to section 30 of the Indian Partnership Act, 1930, and thus the registration of the partnership was rightly refused as being void because it was hit by section 30 of the said Act. In so far as question No. 2 is concerned, it is already answered by a decision of a Division Bench of this court with regard to the very assessee-firm and is reported as Commissioner of Income-tax v. Kishore Chand Ramji Dass, in which the learned judges had held with regard to the partnership deed of December 3, 1947, that the mere fact that the shares of some minors in a firm were shown collectively and the share of each one of them was not separately stated in express words, is not a sufficient ground for refusing registration of the firm, if it is clear from the context beyond doubt that the minors took the shares allotted to them collectively, in equal shares, and the learned judges observed that this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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