COMMISSIONER OF INCOME-TAX, BANGALORE versus SHAH MOHANDAS SADHURAM

Citation: [1965] 3 S.C.R. 771 · Decided: 15-04-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

A 
B 
COMMISSIONER OF INCOME-TAX, BANGALORE 
v. 
SHAHMOHANDASSADHURAM 
April 15, 1965 
(K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.] 
Indian Income-tax Act (11 of 1922), s. 26A-Minors as partners 
of a firm-G11ardian, if can contract on minor's behalf-Whether such 
C partnership could be registered. 
The assessee-firm claimed registration under s. 26A of the Indian 
Income Tax Act on the strength of a partnership deed executed bet-
ween four partners of which t\vo were minors. The Income Tax Offi-
cer refused registration on the ground that the minors were made 
parties to a contract by the eldest ·brother acting on their behalf and 
the minor had actually been debited with a share of loss. This was 
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upheld by the Appellate Assistant Commissioner, but the Appellate 
Tribunal, on a further appeal. construed the deed as having admitted 
the minors only to the benefits of the partnership, and accordingly 
held that the assessee w'1s entitled to be registered. In reference, the 
High Court answered the question in favour of the assessee. In appeal 
by certificate to this Court, the Revenue contended that (i) a guar-
dian is not entitled to contract on behalf of a minor and the deed 
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was consequently void, and (ii) the partnership deed made the mi-
nors as full partners. 
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HELD: The assessee-firm was entitled to be registered under 
the Income-tax Act. (776 HJ 
(i) As long as a partnership deed does not make a minor full 
partner a partnership deed cannot be regarded as invalid on the 
ground that a guardian has purported to contract on behalf of a 
minor. A guardian can do all that is necessary to effect the confer-
ment and receipt of the benefits of partnership. So he must have 
the pawer to scrutinse the terms on which such benefits are received 
by the minor. He must also have the power to accept the conditions 
on which the benefits of partnership are being conferred. [775 G-H] 
(ii} The Partnership deed reasonably construed, only conferred 
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benefits of partnership on the two minors and did not make them full 
partners. 
Case law referred to. 
OVIL APPELLATE JurusmCllON: Civil Appeals Nos. 144-145 
H of 1964. 
Appeals from the order dated November 16, 1960 of the My-
sore High Court in Income-tax Reference No. 3/1959. 
N. D. Karkhanis and R. N. Sachthey, for the appellant (in 
both the appeals). 
R. Ganapathy Iyer, for the respondent (in both the appeal!l). 
77i 
772 
SUPREME 
COURT 
RIWORTS 
[1965] 3 s.c.R. 
The Judgment of the Court was delivered by 
A 
Sikri, J. These two appeals pursuant to a certificate granted 
by the High Court of Mysore under s. 66-A(2) of the Income-tax 
Act, 1922, are directed against its judgment answering the ques-
tion referred tQ it in favour of the respondent-assessee. The ques-
tion referred to is: 
B 
"Whether the assessee, Mohandas Sadhuram, can be gran-
ted registration under Section 26-A of the Indian In-
come Tax Act on the basis of the partnership deed 
made ,1n 1-4-1952 for the assessment.year 1953-54 and 
on the basis of the said deed read with the supplemen-
tary· deed on 1-4-1953 for the assessment year 1954-55". 
C 
The respondent, MI s Shah Mohandas Sadhuram, hereinafter 
referred to as the assessee, is a firm. The assessee claimed registra-
tion under s. 26-A of the Indian Income- Tax Act on the strength of 
a Partnership Deed executed on April 1, 1952. As the answer to 
the question in part turns on the construction of the deed, the re-
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levant clauses may. be set out here. The Partnership Deed first des-
cribes the parties and then recites: 
"Whereof the above four members were till this day mem-
bers of a Joint Family, whereof yesterday that is on 
31-3-1952 the said four members have 'tlecome divided 
not ·only in interest but also by metes and bounds, each E 
of the said members taking to his share one fourth (! / 4) 
of the said joint family assets and liabilities as detail-
ed in the books of account as maintained by the fim1 
known as Seth Mohandas Sadhuram and whereof we 
the first and second members have decided to constitute 
all the said four members as a partnership admitting the 
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third and fourth members thereof to the benefits of the 
said partnership but not to the liabilities thereunder". · 
The first and second members referred to in the recital are 
Atmaram and Doulatram, both majors. 
The other relevant clauses are as follows: 
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"(4) The said firm is agreed to do business of Banking and 
Commerce (which term includes all that is 

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