Law:

Section:

Section 184 of the Income-tax Act, 1961 (Corresponding to section 26A of the Indian Income tax Act, 1922) - Firm - Position prior to 1-4-1993 - Assessment Year 1958-59 - Whether though minor is not personally liable nor will his separate property be liable for debts and obligations of firm but his liability does extend to his share in property and profits of firm - Held, yes - Assessee-firm was consisting three partners and one minor admitted to benefits of firm - According to partnership deed share of profit of twelve annas in a rupee had been allocated among three partners and share of minor had been decided at remaining four annas - ITO refused to grant renewal of registration on ground that according to deed of partnership, minor was made to share profits as well as losses and that, even if he could be regarded as not sharing losses, it was not clear from deed in what proportion losses were to be shared - Whether, if instrument of partnership (i.e. partnership deed) in instant case was so construed that minor was admitted to benefits of partnership, position in regard to losses relating to minor's share did not remain undefined or unspecified - Held, yes - Whether, therefore, registration of assessee-firm could not be refused - Held, yes FACTS The assessee was a firm consisting of three partners, namely, 'C', 'M' and 'H' and one minor, had been admitted to the benefits of the partnership. The firm applied for, and secured, registration under section 26A of the 1922 Act for the assessment year 1956-57 and its renewal for the assessment year 1957-58. The application for renewal of registration for the assessment year 1958-59 was signed by the three partners including 'C', who signed it on behalf of the minor also. The ITO refused to grant renewal of registration on the ground that according to deed of partnership the minor was made to share the profits as well as losses and that, even if he could be regarded as not sharing the losses, it was not clear from the deed in what proportion the losses were to be shared. The AAC and the Tribunal concurred with the view taken by the ITO. On reference: HELD The instrument of partnership did specify the individual…

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