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TMI Blog1973 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of an instrument of partnership executed on October 6, 1966, which showed the constitution of the firm as under: 1. Abdul Aziz Rah, son of Kh. Sona Ullah. 2. Ch. Nabi Rah, son of Kh. Mohd. Sultan Rah. 3. Haji Mohd Sidiq Rah, son of Mohd. Rah. 4. Abdul Salam Darial, son of Kh. Munwar Joo Darial. 5. Mst. Zuhra Bibi, w/o Abdul Gaffar Darial. 6. Hamida Parveen, d/o Kh. Ali Mohd. Rah (minor). 7. Salima Parveen, d/o Kh. Ali Mohd. Rah (minor). 8. Shamim Parveen, d/o Kh. Ali Mohd. Rah (minor). 9. Mubarak Iqbal Rah, son of Kh. Ali Mohd. Rah (minor). 10. Ajaz Ali Rah, son of Kh. Ali Mohd. Rah (minor). Though the above-mentioned minors were admitted only to the profits of the partnership the instrument of partnership was signed by some of them personally as also on their behalf by their paternal uncle, Kh Abdul Aziz Rah, a partner in the firm. This application was rejected by the Income-tax Officer on the ground that since a minor was incapable of entering into a contract and could not under the Partnership Act be a full-fledged partner in a firm, the partnership sought to be registered was invalid and could not, therefore, be registered. This refusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayer for registration was rightly refused. We have given our thoughtful consideration to the submissions made by the learned counsel for the parties. For a proper determination of the question it is necessary in the first instance to find out the essential requirements of the application for registration and then proceed to see whether they are satisfied in the present case or not. A reference to sections 184 and 185 of the Act would show that the following conditions are essential for the registration of a firm: 1. An application under section 184 of the Act on behalf of the firm to the Income-tax Officer before the end of the accounting year relevant to the assessment year for which registration is sought signed by all partners (excepting the minors). 2. The firm should be evidenced by an instrument of partnership, the original as well as a copy whereof should accompany the application. 3. The instrument should specify the individual shares of the partners. 4. The disclosure of the particulars of the apportionment of the income in the previous year between the partners as required by the prescribed form. It is, however, to be noted that under the prescribed form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the relevant year signed by all the major partners personally, there was an instrument of partnership evidencing the constitution of the firm, a copy of which was produced and there is nothing to show that the partners declined despite a demand by the Income-tax Officer to produce the original instrument of partnership, and the instrument also clearly specified the individual shares of the partners. A reference to the application for registration on which great stress has been laid by Mr. J. N. Bhan to show that the minors were admitted not only to the benefits of partnership but were also made liable for losses, would make it clear that the assessee wanted registration of the partnership firm on the basis of the aforesaid instrument of partnership. Accordingly, the application has not to be read in isolation but in conjunction with the said instrument, the dominant clause whereof is clause 3 which runs as follows : " That the firm shall maintain proper accounts wherein all transactions shall be entered. Trading cum profit and loss account along with the balance-sheet shall be prepared by the end of March every year, and (a) profits shall be credited to the personal accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits of partnership and where it was contended on behalf of the income-tax department that the deed of partnership was void as : (1) the minors had been made full-fledged partners, and (2) the guardian had contracted on behalf of the minors which he was not entitled to do, it was held repelling these contentions that the partnership deed must be construed reasonably. It was further held by their Lordships that as long as the partnership deed does not make a minor a full-fledged partner, the deed cannot be regarded as invalid on the ground that the guardian had purported to contract on behalf of the minors if the contract is for the purpose mentioned in section 30 of the Partnership Act. Their Lordships further went on to observe that if a guardian can accept benefits of partnership on behalf of the minor he must have the power not only to scrutinise the terms on which such benefits are received by the minor but he must also have the power to accept the conditions on which the benefits of partnership are being conferred and that a guardian can do all that is necessary to effectuate the conferment and the receipt of the benefits of the partnership. It was further remarked by thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership. In Chiman Lal Umaji and Sons v. Commissioner of Income-tax, it was held that the instrument of partnership should be construed reasonably. It was further held that if a valid and genuine firm is constituted by the instrument of partnership which specifies the individual shares of the partners and also declares how the losses relating to the minors' shares would be borne, the registration could not be refused. The decision in Commissioner of Income-tax v. Dwarkadas Khetan and Co. is clearly distinguishable. In that case, as pointed out by their Lordships themselves in Commissioner of Income-tax v. Shah Mohandas Sadhuram, no distinction was made between the adult partners and the minor. The minor was described as a full partner entitled not only to a share in the profits but also liable to bear all the losses including loss of capital. He was further required to attend to the business to give his consent in writing, if so required, was entitled to manage the affairs of the firm including inspection of account books and was given the right to vote if a decision on votes had to be taken. In the present case, as already stated, the aforesaid five minors were not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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