Law:

Section:

Section 185, read with section 2(23) of the Income-tax Act, 1961 (corresponding to section 26A read with section 2(6B) of the Indian Income-tax Act, 1922) - Firm - Position prior to 1-4-1993 - Assessment year 1960-61 - Assessee firm was refused registration by ITO on ground that shares of minors admitted to benefit of partnership were not separately specified in deed of partnership - Whether since minors were not partners of assessee firm, section 13(b) of Partnership Act, 1932 was not applicable to instant case - Held, yes - Whether under section 2(6B) of 1922 Act, expression 'partner' includes any person who being minor has been admitted to benefits of partnership and, therefore, their individual shares must be specified in partnership deed - Held, yes - Whether since in instant case deed of partnership specified collective share of all minors in profits of firm "without more" and materials on record did not even suggest that they had equal shares in their collective share, assessee firm was rightly held not entitled to registration - Held, yes FACTS The reference related to the assessment year 1960-61, and it arose out of the registration proceedings under section 26A of the Indian Income-tax Act, 1922. The assessee was a firm constituted under a deed of partnership dated 28-4-1959. The minor sons of a deceased partner, were admitted to the benefits of this partnership and they were given 1/10th share of profits of the firm. The ITO refused registration, for, according to him, the individual shares of those minors were not specified in this partnership deed. The AAC allowed the appeal filed by the assessee, on the ground that in the absence of any specification of the individual shares of the partners the presumption under the Partnership Act, namely, that the partners shall have equal shares in the profit of the firm should apply in the case of minors and, therefore, those minors had equal share in their collective share and in that view of the matter he directed the ITO to grant registration to the assessee-firm. In the appeal filed by the revenue, it was held by the Tribunal that the individual shares of those minors were not specified and, therefore, the…

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