9911796707
TMI Blog1996 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership as ' illegal ' or ' invalid ' and, hence, the assessee's claim for registration of the firm cannot be denied by the Income-tax Officer ? and 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in overlooking the fact that the partnership deed and Form No. 11 have not been signed either by the guardian of Miss Gita, or by Miss Gita herself even though she is a major and that this will vitiate the application for registration and rules 22(2)(1) and 22(5) of the Income-tax Rules, 1962 ? " The assessee is a partnership-firm, called Shankar Cottons, Coimbatore. The assessee filed an application for registration of the firm for the assessment year 1975-76. The partnership was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration to the assessee-firm, since, according to the Tribunal, there is no prohibition in the Indian Partnership Act, 1932, for admitting a major to the benefits of the partnership. The point for consideration is as to whether a major can be admitted to the benefits of the partnership. In the present case, one of the daughters of one Mr. Aghoram Iyer, Miss A. Gita, aged about 21 years, was admitted to the benefits of the partnership since she happens to be a deaf and dumb person. A deaf and dumb person cannot be admitted to the benefits of the partnership as per the provisions of section 30 of the Indian Partnership Act, 1932. Section 6 of the Indian Partnership Act, 1932, determines the mode of existence of the partnership. Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partnership deed itself was invalid, the firm was not entitled to registration ". Before the Andhra Pradesh High Court, two decisions were relied upon, viz., (1) CIT v. R. S. Shoe Factory [1963] 47 ITR 917 (All) and (2) Manohar Das Kedar Nath v. CIT [1950] 18 ITR 914 (All) in order to support the contention put forward on behalf of the assessee that merely by giving a share in the profits the deaf and dumb person did not become a partner, According to the facts arising in Manohar Das Kedar Nath v. CIT [1950] 18 ITR 914 (All), four brothers entered into a partnership and they together took 15 annas share out of 16 annas. The remaining one anna share was left for charity. The registration was refused by the Department on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . B. Pandaiah and Co. [1983] 143 ITR 464 came to such a conclusion. After considering the aforesaid two decisions, the Andhra Pradesh High Court was of the view that " the object of the two partner-brothers was laudable inasmuch as they wanted to provide some income to their deaf and dumb brother and that, therefore, the Tribunal's order is unsustainable for the reasons given above. Whether the share in the profits given to the deaf and dumb brother was in the nature of charity and whether such a charity should, in the circumstances, have been provided to the extent of one-third of the profits of the firm were all questions which have not been investigated at any stage. The Tribunal was in error in discovering the said ground at the stage o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 6 of the Partnership Act says that the receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business, does not of itself make him a partner along with the persons carrying on the business. It would mean that a major cannot be admitted to the benefits of partnership. Admitting a major as a partner to the benefits of partnership was impliedly prohibited under section 30 of the Indian Partnership Act, 1932. In view of the abovesaid legal position, we are unable to subscribe to the view taken by the Tribunal in holding that the assessee-firm herein is also entitled to registration under section 184 of the Income-tax Act, 1961, even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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