Law: Income Tax Act, 1961

Section: 185

Income-tax----Firm---Registration---Minor---Minors shown as 'partner---Share of minors in profits and losses of firm specified in partnership deed---No recital in partnership deed that minors were admitted to benefits of partnership---Firm not valid---Not entitled to registration---Indian Income Tax Act, 1961, S.185--¬Indian Partnership Act, 1932, S.30. Section 30 of the Indian Partnership Act, 1932, clearly lays down that a minor cannot become a partner, though with the consent of the adult partners he may be admitted to the benefits of a partnership. Any document which goes beyond' this section cannot be regarded as valid for purposes of registration under the Income-tax Act. The guardian of a minor is entitled to do all things necessary for effectuating the conferment of the benefits of partnership on the minor. A guardian can agree on behalf of the minor to contribute capital for the business of the firm in which the minor is admitted to the benefits of partnership. There is thus no bar in law to the guardian of a minor agreeing to the starting of a business and the constitution of a firm on the condition that the minor shall not be a full-fledged partner; but shall only be entitled to the benefits of partnership, for, he is only securing thereby the conferment of the benefit of partnership on the minor. Held, that, in the instant case, the partnership deed specifically disclosed the names of the minors as being represented by their respective guardians. Under clause (8), the proportion of the profits and losses of the partnership to be shared and contributed by the partners was stated. There was no recital in the deed that the minor was being admitted only to the benefits of the partnership. On the other hand, he was being treated for all intents and purposes as a partner with the same rights and obligations as the major partners. The expression "benami" denotes transactions for the benefit, not of the persons taking part in the transactions, but of the person or persons not mentioned in the transaction. As such, in the circumstances of the case, especially in view of the names of the minors being specifically shown as parties, represented by their…

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