Case: The Commissioner Of Income-Tax, Bombay Vs. M/S. Dwarkadas Khetan &amp; Co

considered, because all the reasons on which the cases on this side have proceeded are given there. In that case, there were three partners, one of whom was a minor. They formed a Hindu undivided family; later, a deed of partnership was executed in which the minor was represented by his father-in-law. It was held that the fact that the minor was included as a partner did not make the partnership as between the two adult partners invalid, and that the minor must be deemed to have been admitted to the benefits of the partnership by the two adults. The learned Judges referred to the provision of S. 2 (6-B) of the Income-tax Act, where it is provided:""Partner" includes any person who being a minor has been admitted to the benefits of partnership.",and observed that in view of this definition and the fact that a minor could be admitted to the benefits of partnership under S. 30, the document was not invalid, but must be read as giving to the minor the rights laid down by the Partnership Act. They also observed that too rigid a construction need not be put upon the deed, and referred to Lindley of Partnership, 11th Edn., p. 87 and A. Khorasany v. C. Acha, I L R 6 Rang 198 : (A I R 1928 Rang 160). The other cases which we need not examine are Vincent v. Commr. of Income-tax, 1952-22 I T R 285: ( A I R 1958 Pat 177) .7. On the other hand, there is a decision of the Calcutta High Court reported in Hoosen Kassam Dada v. Commr, of Income-tax, Bengal, 1937-5 I T R 182, in which Costello and Panckridge, JJ. Have held that under S. 26-A of the Income-tax Act and the Rules, the Income-tax Officer is only empowered to register a partnership which is specified in the instrument of partnership and of which registration is asked for. The learned Judges, therefore, hold that it is not open to the Department to register a partnership different from that which is formed by the instrument. In Hardutt Ray Gajadhar Ram v. Commr. of Income-tax, 1950-18 I T R 106, Malik, C. J. and Seth, J. hold that where a minor is admitted as a full partner with equal rights and obligations with adults, the deed is invalid. It is pointed out that the English law on the subject as different. In that case, however, there was one other ground for invalidating the deed, because the minor had been adopted into another family and his natural father who had signed as his guardian in the deed could not do so, as he had ceased to be the natural guardian. The decision, however, supports the case of the Commissioner.8. In Banka Mal Lajja Ram and Co. v. Commr. of Income-tax, 1953-24 I T R 150 : (A I R 1953 Punj 270), it is held that a minor cannot be a partner, and that the partnership which admits a minor as full partner cannot be registered. It is true that in that case the High Court did not consider the question whether the partnership should have been taken to be a valid partnership consisting of the adult partners, because no such question was referred. The decision, however, is against a claim for registration of such a document.9. In our opinion, the Calcutta view is preferable to the view taken by the Madras High Court. The error in the Madras view is in using the definition to show that a deed including a minor as a competent partner is valid. What the definition does is to apply to a minor admitted to the benefits of partnership all the provisions of the Income-tax Act applicable to partners. The definition cannot be read to mean that in every case where a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted to the benefits of partnership. The Rules which have been framed under S. 26-A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits a partnership would be competent to sign such an application.The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner. For that purpose, the law of Partnership must be considered, apart from the definition in the Income-tax Act.10. Section 30 of the Indian Partnership Act 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 partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the Income-tax Authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the Income-tax authorities to register a document which is different from the one actually executed and asked to be registered. In our opinion, the Madras view cannot be accepted.11. The judgment under appeal has followed the Madras view, and, in our opinion, it falls into the same error in which the Madras High Court has fallen earlier. The answer to the first question should, therefore, have been in favour of the Department. The answer given by the High Court is vacated, ad the question will now be answered in the negative. As already stated, there is no need to answer the second question, which does not arise.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In so far as the second question is concerned, the matter is now settled by the decision of this Court in R. C. Mitter and Sons v. Commr. of Income-tax, (1959) 39 ITR 194: (AIR 1959 S C 868). But, in our opinion, the decision of the High Court on the first question was not leave the second question open at all.6. There is a distinct cleavage of opinion among the High Courts on this point. The Bombay, Madras and Patna High Courts have held that where a minor is admitted as a full partner by adult partners the document can be registered after interpreting it to mean that the minor has been admitted to the benefits of partnership and not as a full partner. The Calcutta, Allahabad and Punjab High courts have taken a contrary view. The Bombay case is the one which is under appeal, and the Patna High Court followed that decision and the two earlier decisions of the Madras High Court. The Madras High Court decisions are of the same Divisional Bench and were pronounced on the same day.In our opinion, the Calcutta view is preferable to the view taken by the Madras High Court. The error in the Madras view is in using the definition to show that a deed including a minor as a competent partner is valid. What the definition does is to apply to a minor admitted to the benefits of partnership all the provisions of the Income-tax Act applicable to partners. The definition cannot be read to mean that in every case where a minor has, contrary to law, been admitted as a full partner, the deed is to be regarded as valid, because, under the law, a minor can be admitted to the benefits of partnership. The Rules which have been framed under S. 26-A quite clearly show that a minor who is admitted to the benefits of partnership need not sign the application for registration. The law requires all partners to sign the application, and if the definition were to be carried to the extreme, even a minor who is admitted to the benefits a partnership would be competent to sign such an application.The definition is designed to confer equal benefits upon the minor by treating him as a partner; but it does not render a minor a competent and full partner. For that purpose, the law of Partnership must be considered, apart from the definition in the Income-tax Act.10. Section 30 of the Indian Partnership Act 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 partnership. Any document which goes beyond this section cannot be regarded as valid for the purpose of registration. Registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. If the Income-tax Authorities register the partnership as between the adults only contrary to the terms of the document, in substance a new contract is made out. It is not open to the Income-tax authorities to register a document which is different from the one actually executed and asked to be registered. In our opinion, the Madras view cannot be accepted.11. The judgment under appeal has followed the Madras view, and, in our opinion, it falls into the same error in which the Madras High Court has fallen earlier. The answer to the first question should, therefore, have been in favour of the Department. The answer given by the High Court is vacated, ad the question will now be answered in the negative. As already stated, there is no need to answer the second question, which does not arise.