Law:

Section:

Sections 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 years 1956-57 and 1957-58 - Whether a HUF can be a partner in a firm - Held, no - Whether individual shares of minors who are admitted to benefits of partnership must be specified in partnership deed - Held, yes - Whether where two minors were admitted to benefits of partnership and they were entitled to rights and were subject to liabilities arising as a result of their admission to benefits of partnership, specification of their individual shares was necessary under provisions of section 26A of 1922 Act and since partnership deed was deficient in this respect, assessee was not entitled to registration on basis of said partnership deed - Held, yes FACTS The assessee-firm was originally consisted of three sons and a mother as partners and the fourth son, who was then a minor was admitted to the benefits of the partnership. Minor attained majority on 27-11-1954. On 3-5-1955, one of the partners of the assessee-firm 'B' died leaving him surviving his widow, and his two sons. The male heirs of 'B' were admitted in the assessee-firm in the place of 'B' as representing his share, but as they were both minors, they were admitted to the benefits of the partnership. A new partnership deed was drawn up between the partners on 14-5-1955, recording the aforesaid changes in the constitution of the partnership. The new partnership deed was signed by the major partners but not by the minors, or by their mother. The assessee-firm made application to the ITO under section 26A of the 1922 Act, for registration on the basis of the new partnership deed dated 14-5-1955, for the assessment year 1956-57. A similar application for renewal of registration on the basis of the new partnership deed was also made by the assessee-firm for the subsequent assessment year 1957-58. Both the applications were rejected by the ITO on the ground that the new partnership deed on the basis of which the applications were made did not specify the individual shares of the two minors in the profits and losses of the assessee-firm. The assessee-firm…

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