LexTHE COMMISSIONER OF INCOME-TAX, BOMBAY versus M/S. DWARKADAS KHETAN & CO.
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2 S.C.R. SUPREME COURT REPORTS 821 THE COMMISSIONER OF INCOME-TAX, BOMBAY v. M/S. DWARKADAS KHETAN & CO. (J. L. KAPUR, M. HIDAYATULLAH and J. c. SHAH, J.J.) Income Tax - Partnership firm including minor, if can be registered- Indian Income-tax Act, I9ZZ (II of I9ZZ), s. z6A- Indian Partnership Act, I93Z (IX of I9JZ), s. 30. · One of the persons who entered into a partnership was a minor and in the instrument of partnership he was described as a full partner with equal rights and obligations with the other adult partners. The deed of partnership which was signed by the minor was produced before the Registrar of Firms for regis- tration and he granted a certificate showing the minor as a full partner and not as one entitled merely to the benefts of the partnership. The Income-true Officer, however, refuse<.! to regis- ter the firm under s. 26A of the Indian Income-tax Act and his decision was upheld by the Income-tax Authorities and the Income-tax Appellate Tribunal. The High Court differed from the Tribunal and held that the J)rm should be registered. On appeal by the Commissioner of Income-tax, Held, that the Rules framed under s. 26A 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 of 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 defi- nition in the Income-tax Act. 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 per- sons 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 sub- stance 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. Hoosen Kassam Dada v. Commissioner of Income-tax, Bengal, (1937] 5 I.T.R. 182, Hardutt Ray Gajadhar Ram v. Commissioner of 104 D1cember r. 822 SUPREME COURT REPORTS [1961) .1960 lnaome-tax, [1950) 18 I.T.R. I06, Banka Mal Lajja Ram and Co . v. Commissioner of Income-tax, [1953) 24 I.T.R. 150, approv- 7'he Cotnmissione7 ed. of /ncomewta~, Bon1bay v. Af /s. Dwarkadas Khetan & Co. ] akka Devayya and Sons v. Commissioner [1952] 22 I.T.R. 264, disapproved. CIVIL APPELLATE JURISDICTION: Civil 328 of 1959. of Income-tax, Appeal No. Appeal by special leave from the judgment and order dated 23rd February, 1956, of the Bombay High Court in Income-tax Reference No. 34 of 1955. K. N. Rajagopala Ayyangar and D. Gupta, for the appellant. Rameshwai· Nath, S. N. Andley, J.B. Dadachanji and P. L. Vohra, for the respondent. 1960. December 1. The Judgment of the Court was delivered by Hidayatullah J. HIDAYATULLAH, J.-The Commissioner of Income. tax has filed this appeal, with special leave, against the judgment and order of the High Court of Bombay, by which the High Court answered two questions referred to it in favour of the respondents, Messrs. Dwarkadas Khetan & Co., Bombay. These questions were: "(1) Whether the instrument of partnership dated 27-3-1946 created a deed of partnership? (2) If the answer to question No. 1 is in the affirmative, wheth~r the fact that on 1-1-1946 there was no firm in existence would be fatal to the applica- tior for registration of the firm under Section 26A of the Indian Income-tax Act or whether the firm could be registered with effect from 26-3-1946 if it is held that the firm was genuine?" Prior to January 1, 1945, there was a firm called Dwarkadas Khetan & Co. On that date, the firm ceased to exist, because the other partners had previ- ously withdrawn, and it came to be the sole proprie- tory concern of Dwarkadas Khetan. On February 12, 1946, Dwarkn.
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