Law: Income Tax Act, 1922

Section: 26A

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 1951-52 - Application for registration under section 26A of assessee firm constituted by eight partners including two minors, who were claimed to be joint with their fathers after partition of HUF of which they were members and whose specific shares were not mentioned in instrument of partnership but shown joint with their respective fathers, was allowed by Tribunal holding that fathers being kartas of erstwhile HUFs as well as of truncated HUFs had become partners of firm as such and also that minors were not partners - Whether on construction of a partnership agreement it could be said that minor was a party sharing profits and losses, and since said agreement did not show that 'T' and 'R' agreed as kartas of their respective truncated HUFs because, firstly, there was no joint family after severance without reunion, and secondly, if they were kartas, they would not hold share along with their respective minor sons, Tribunal erred in holding that shares were allotted to HUFs inasmuch as it could not take away individual character of T and R and make them partners qua undivided families - Held, yes - Whether as such minors were partners in firm and their shares were not specified, consequently, agreement was incapable of registration - Held, yes FACTS The assessee firm applied for registration under section 26A on the basis of instrument of partnership dated 21-7-1950. The parties to the agreement were T and his three sons, including a minor represented by his mother and natural guardian, and R and his three sons, including a minor represented by his mother and natural guardian. In the agreement it was stated that T and his sons, constituted a HUF and R and his sons, constituted another HUF and that these two HUFs were carrying on business in partnership under an agreement dated 24-11-1937. It was further stated therein that the two HUFs were partitioned by way of an agreement of partition on 30-3-1950 that for the benefit of the minors. It was agreed that they should remain joint with their respective…

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