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Section 185 of the Income-tax Act, 1961 - Firm - Registration - Refusal of - Assessment year 1968-69 - Whether a clause in partnership deed contemplating contribution of capital by minor, who had been admitted to benefits of partnership, or on behalf of minor, would render deed invalid so as to refuse registration to firm - Held, no FACTS The assessee-firm consisting of 13 partners and one minor who was admitted to the benefits of partnership, applied for registration for the assessment year 1968-69. On a perusal of the partnership deed, the ITO found that one of the clauses of the deed provided that the capital was to be contributed by all the partners including minor and on their failure to do so interest would be charged. The ITO concluded from the said clause that the minor was being treated as equal with other partners. He, thus, held that there was no genuine partnership and refused registration. On appeal, the Tribunal observed that the minor was admitted only to the benefits of partnership and even if his guardian had agreed for contributing the capital that would not invalidate the deed. The Tribunal, thus, held that the assessee was entitled to registration. On reference : HELD There is nothing in law which prevents a guardian from entering into a partnership on behalf of a minor ward. A minor can never be taken as a full-fledged partner. If a guardian enters into a contract of partnership on behalf of a minor, he may agree to contribute capital on behalf of a minor. Even if there is a clause that the minor has to contribute capital and if he does not contribute capital in pursuance of that clause, the clause cannot be enforced against the minor. The material clause, in the present case on which the ITO relied, that the capital had to be contributed by the minor also and failure to do so would make him liable to pay interest, did not make the minor a full-fledged partner. Further, in view of the Supreme Court's decision in the case of CIT v. Shah Mohandas Sadhuram [1965] 57 ITR 417, the clause relating to contribution of capital by the minor and payment of interest in default did not render the partnership deed invalid. Thus, the assessee-firm was…

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