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TMI Blog1990 (7) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... to the benefits of partnership) was not illegal in terms of section 11 of the Companies Act, 1956 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the assessee-firm was entitled to registration under the Income-tax Act, 1961 ?" The assessee-firm, consisting of 17 major partners and 4 minors who were admitted to the benefits of partnership, was constituted, vide partnership deed dated October 12, 1965, and was duly registered. It was assessed for the assessment years 1966-67 and 1967-68, in the status of a registered firm. The Income-tax Officer, however, in exercise of his powers under section 186(1) of the Income-tax Act, 1961. (hereinafter referred to as "the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid two questions at the instance of the Department for the opinion of this court. The Act has adopted the definitions of "firm", "partner" and "partnership" given in the Indian Partnership Act. Section 2(23) of the Act is quoted below: "(23) 'firm', 'partner' and 'partnership' have the meanings respectively assigned to them in the Indian Partnership Act, 1932 (9 of 1932) ; but the expression 'partner' shall also include any person who, being a minor, has been admitted to the benefits of partnership." According to section 4 of the Indian Partnership Act, partnership is the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all. The persons who have entered into partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act prohibits the formation of a company, association or partnership consisting of more than 20 persons for the purpose of carrying on any business for gain unless it is registered as company. Partnership being the result of a contract between the partners and a minor being incompetent to enter into a contract, only adult persons who constitute the partnership on the basis of an agreement are to be taken into consideration for finding out whether a partnership consists of more than 20 persons and minors, not being partners, cannot be taken into account for the purpose of section 11(2) of the Companies Act. As the assessee-firm consisted of 17 partners, it was legally entitled to be registered under the Act. In our opinion, the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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