9911796707
TMI Blog1998 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... on the attainment of majority by one of the minors admitted to the benefits of partnership, no new deed of partnership was drawn by the partners. The firm, Kikani and Company, Coimbatore, was constituted under the partnership deed dated June 8, 1963, and had, inter alia, admitted one Yogeshkumar Kikani, at that time a minor, to the benefits of partnership. The said minor attained the age of majority on March 14, 1973. The firm had been registered and the registration of the firm had continued from year to year. After the erstwhile minor attained majority, he did not give any public notice that he has elected to become a partner nor opted out of the partnership firm, and consequently at the expiry of six months from March 14, 1973, he bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not genuine. The cancellation was effected under section 186 of the Act. Against that order of cancellation, the assessee appealed to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) allowed the appeal after observing that the cancellation had been effected on the basis of the Revenue audit objection and that in the experience of the Commissioner of Income-tax (Appeals) the Revenue audit has all too frequently been introducing variations of its own invention into the taxing statute, and that after the Commissioner of Income-tax (Appeals) had gone through sections 184 and 186 with a fine toothed comb, so to speak, he could not find anything in either provision to even remotely suggest that when a minor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at share must be ascertainable from the terms of the partnership deed, in order to permit the continuance of that firm as a registered firm. Counsel further submitted that, if any change in the losses sharing ratio is brought about by an agreement of parties, such a change should be reflected in and form part of a new partnership deed, and it is only on the basis of such a new partnership deed that fresh registration can be granted to that new firm. In this case, it was pointed out by counsel admittedly, that the original partnership deed showed that the two adult Kikanis were to have 12 per cent. share each in the losses while the erstwhile minor Yogeshkumar Kishandas was not to have any share in the losses and the position remains unalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hiralal Agrawal [1996] 218 ITR 21, wherein after referring to the aforementioned judgment of the Allahabad High Court, it was held that even a minor modification in the loss sharing ratio in a partnership on the minor attaining the age of majority would amount to change in the constitution of the firm. Counsel also referred to the judgment of the Allahabad High Court in the case of Raj Stores v. CIT [1988] 170 ITR 119, wherein it was held that no oral agreement could be pleaded regarding the sharing of losses after the minor attained majority, as a loss sharing ratio specified in the deed of partnership could not be altered by oral agreement, and in the absence of a written deed of partnership specifying the share of the erstwhile minor w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same proportion as the profits, if there is no agreement as to how the losses are to be apportioned. For deciding the case on hand, we must take guidance from this judgment of the Supreme Court which has laid down with its reasonableness that must be the guiding style in order to construe the sufficiency of the documentation produced by the applicant for the registration of a firm. Minor omissions in the document or the statement of the same in a separate document of matters which could have been stated in the principal document are not factors which would deprive the firm of the benefit by registration. If it is necessary to construe the documents and reasonable construction permits an inference which would help to supply what had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question of the existence and the genuineness of the firm. It is not the cage of the Revenue that there was any change in the firm other than a change in the proportion in which the loss was to be shared among these Kikanis. The only change being the reduction from 12 per cent. each to 11 per cent. each in the extent to which the two adult Kikanis were to share in the losses, and the share of the erstwhile minor in the loss being now fixed at two per cent., while earlier he was not required to share in the loss as a minor. No other change had taken place in the firm. In this background what was required was ascertainment of the substance of the matter, rather than mere form namely, the existence or otherwise of a new document setting out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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