Citation Codes

Equivalent Citations

citation codes

Case Number

Income Tax Ref. No. 114 of 1963

Judges

S.C Manchanda
M.H Beg, JJ.

Acts

section 66(1) of the Indian Income Tax Act, 1922, (hereinafter referred to as the Act).
SECTION 26 INDIAN INCOME TAX ACT
provisions of Section 30 of the Indian Partnership Act.
SECTION 30 PARTNERSHIP ACT
Section 4 of the Indian Partnership ship Act
section 30 of the Indian Partnership Act
rule 6 of the Income Tax Rules, 1922.
SECTION 14 FINANCE ACT
rule 4 of the Income Tax Rules
Indian Partnership Act, 1932,

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Smart Summary

Summary of Legal Opinion — Manchanda, J.

Factual and Procedural Background

The reference arises under section 66(1) of the Indian Income Tax Act, 1922. The specific question referred was whether, on the facts and in the circumstances of the case, the firm was entitled to renewal of registration under section 26A for the assessment year 1959-1960.

The assessee is the firm Messrs Hiralal Jagannath Prasad of Banaras, described as a Hindu undivided family concern carrying on kirana and money-lending businesses. After a partial partition on 17 July 1948, the members formed a partnership effective 18 July 1948; an instrument of partnership was drawn up on 31 July 1948. The deed described six major partners and admitted Ram Prasad, a son of Hira Lal, to the "benefit of partnership" under section 30 of the Indian Partnership Act, giving him a 1/7th share in profits. The deed did not list the minor as one of the parties in the opening paragraph; he was mentioned in clause (3) as admitted to benefits.

Clause 7 records capital contributions (including a sum belonging to the minor). Clause 8 provides that on the death of any partner heirs will join and minors will be admitted to the benefits of partnership under section 30.

The firm was registered for assessment years 1950-1951 through 1958-1959. For assessment year 1959-1960 the firm applied for renewal of registration under rule 6 of the Income Tax Rules, 1922. The renewal application was signed by seven persons, including Ram Prasad, who attained majority on 6 May 1958 (during the relevant accounting period). A fresh partnership instrument dated 5 June 1958 existed but the Court treated that as relating to the next assessment year and not governing the registration decision for the relevant year.

The Income Tax Officer refused the renewal on the ground that the partnership deed did not specify the allocation of a remaining 1/7th share of loss — reasoning that the six major partners were each expressly liable to 1/7th of losses and therefore liable only to 6/7th in aggregate, leaving 1/7th unspecified such that any partner could disown loss beyond his 1/7th. The Appellate Assistant Commissioner and the Tribunal confirmed the refusal, the Tribunal holding that the instrument did not comply with section 26-A's requirement to specify the shares of each partner.

Legal Issues Presented

Whether, on the facts and in the circumstances of the case, the firm was entitled to renewal of registration under section 26-A of the Indian Income Tax Act, 1922, for the assessment year 1959-1960?
Whether the partnership instrument before the Income Tax Officer disclosed a genuine firm "constituted as shown in the instrument of partnership" (i.e., whether the deed specified the individual shares of partners as required by section 26-A and the Rules)?

Arguments of the Parties

Respondent (Income Tax Department) / Revenue Arguments

The Income Tax Officer's written reason for refusal: clause (3) of the partnership deed specifically provided that six major partners were each liable to 1/7th of the losses, making the aggregate liability of the six majors 6/7th and leaving the remaining 1/7th of loss unspecified.
Because the partnership deed did not specify who would bear the unspecified 1/7th loss, a partner could potentially disown any loss beyond his 1/7th liability; therefore the instrument failed to comply with section 26-A which requires the instrument to specify the shares of each partner.
The Tribunal and Appellate Assistant Commissioner adopted the view that registration confers benefits and the statutory conditions for obtaining such benefits (strict specification of shares) must be strictly complied with.

Appellant (Assessee) Arguments

Implicit in the reference is the contention that the partnership deed, read reasonably and as a whole, did specify the shares adequately (the clause shows each of six partners has one-seventh share in profits and are "liable to bear the losses according to his share"); thus the deed did not leave any 1/7th of loss unspecified.
Even if the shares in loss were not explicitly quantified, refusal of registration was not justified because section 26-A aims to protect the revenue from bogus or colourable firms; absence of an express allocation of loss would not prejudice the revenue — rather it would be the partners who might lose the benefit of setting off losses against other income.
The partnership deed should be construed reasonably; mere non-specification or lack of meticulous calculation of shares in losses does not render a deed invalid for registration purposes.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Lakshmi Trading Co. v. Commissioner of Income Tax, I.T. Ref. No. 116 of 1962 (All)	Illustration that the prescribed form (column 6) could have been split to show separate shares in profits and losses; and that a deed was not held invalid merely because shares in profits are specified while shares in losses are not separately stated.	Court relied on the decision to support the proposition that mere omission of separate specification of shares in losses does not invalidate a partnership deed for registration under section 26-A; the Rules and form emphasize profits (or loss) and allow marking a partner as profit-only.
Commissioner of Income-tax, Mysore v. Shah Mohan Dass Sadhuram (1965) 57 ITR 415 : AIR 1966 SC 15	Shows that even where partners' shares were not specified, an arrangement distributing profits and losses pro rata by capital was acceptable; partnership deeds must be reasonably construed.	Used as supporting authority that partnership deeds should be construed reasonably and that lack of explicit specification of shares does not automatically invalidate the instrument for registration.
Commissioner of Income Tax, Bombay v. Dwarka Dass Khetan & Co. (1961) 41 ITR 528 : AIR 1961 SC 680	Decision turned on its own peculiar facts where a minor was treated as a full partner with extensive rights and liabilities; principle that facts matter and deeds must be construed reasonably.	Cited and distinguished: Court noted the decision was on peculiar facts (minor treated as full partner) and therefore it did not govern the present case where the minor was admitted only to benefits under section 30.
Commissioner of Income Tax v. Shah Jethaji Phul-chand (1965) 56 ITR (SN) 25	Reiterated the principle that partnership deeds must be construed reasonably.	Cited for general support of the Court's approach to interpret the partnership deed reasonably and as a whole in determining the effect of the provisions concerning profits and losses.
Thacker & Co. v. Commissioner of Income-tax, Gujarat (1966) 61 TTR 540 (Guj)	Represented a contrary view relied upon by the learned Standing Counsel (interpretation supporting stricter compliance).	Court expressly stated it would respectfully differ from the view taken by the Gujarat High Court as applied in that decision, finding the stricter approach unjustified in the circumstances of the present case.

Court's Reasoning and Analysis

The Court began with the statutory and regulatory framework: section 26-A requires an application for registration to be accompanied by an instrument of partnership "specifying the individual shares of the partners." The Rules (particularly the prescribed Form I and schedules) focus on the division of profits (or loss) and provide that column 6 of Schedule A should show the "share in the balance of profits (or loss)". Note (2) to the Schedule expressly allows marking a partner who is entitled to share in profits but not liable for losses by placing the letter "p" against his share.

The Court observed that the statutory scheme underlying registration is protective of the revenue — to guard against bogus firms — and to identify readily the share of each partner so that assessment under section 23(5) and 23(6) can be made. But the Court emphasised that the Rules and the form show the emphasis is on stating the share in profits or loss, not necessarily on separate, painstaking calculation of two distinct columns for profit and loss unless required by the deed itself.

Relying on Lakshmi Trading Co., the Court held that a deed should not be held invalid merely because shares in profits are specified while shares in losses are not separately stated, and that the form does not compel the assessee to perform a detailed calculation for both profit and loss shares. The Court read clause (3) of the partnership deed fairly and liberally: while clause (3) explicitly fixes a 1/7th share in profits for each of the six named partners (and similarly admits the minor to a 1/7th share in profits under section 30), the clause also says partners "will be liable to bear the losses according to his share." That wording, read as a whole within the deed, shows the partners' shares in loss are to correspond to their shares in profits — i.e., one-seventh each — and does not support the Revenue's inference that only six partners bore 6/7th and one-seventh remained unspecified.

Further, the Court reasoned that even if, arguendo, the shares in losses were not precisely specified in the deed, refusal of registration was not justified on that ground alone. Section 26-A's purpose is to prevent bogus firms; where the absence of a specific allocation of losses would, at worst, harm the partners' ability to get benefits (set-off or carry forward of loss), that consequence affects the partners and not the revenue. The burden of proving a loss and the proportions in which it should be carried forward rests with the firm or its partners; any inability to obtain set-off or carry forward is a disadvantage to the assessee, not the State. Therefore an omission which disadvantages the partners does not supply a legitimate ground for refusing registration.

The Court invoked recent Supreme Court decisions (Commissioner of Income-tax, Mysore v. Shah Mohan Dass Sadhuram; Commissioner of Income Tax, Bombay v. Dwarka Dass Khetan & Co.; Commissioner of Income Tax v. Shah Jethaji Phul-chand) to support the propositions that partnership deeds must be construed reasonably and that factual distinctions matter. On construction of the deed as a whole, the Court found the minor was not admitted as a full partner but only to the benefits under section 30, and that the deed did not leave a one-seventh share of loss unallocated.

Holding and Implications

Holding: The question referred is answered in the affirmative and in favour of the assessee; the Court concluded that the firm was entitled to renewal of registration under section 26-A for the assessment year 1959-1960.

Implications and direct consequences:

The Court held that a partnership deed should be construed reasonably and as a whole; mere absence of a separate, explicit statement of shares in losses in the manner contended by the Revenue will not automatically disqualify an instrument from registration under section 26-A.
The Court found that the partnership deed, when read fairly, indicated that partners would be liable to bear losses according to their shares (i.e., proportionate to profits), and that the minor was admitted only to the benefits of partnership under section 30 and not as a full partner liable for losses.
The Court expressly stated it would respectfully differ from the view taken by the Gujarat High Court in Thacker & Co. v. Commissioner of Income-tax (Guj), to the extent that the Gujarat decision would support refusal in these circumstances.
Costs: The Department was ordered to pay the assessee's costs, assessed at Rs. 250/-, and counsel's fee was assessed at Rs. 250/-, as directed by the Court.

No statement in the opinion asserts that a broader binding precedent was newly created beyond the Court's interpretation and its respectful disagreement with the Gujarat High Court; the decision primarily resolves the referred question in favour of the assessee and clarifies the proper approach to construction and registration under section 26-A in the circumstances described.

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M/S. Hiralal Jagannath Prasad v. Commissioner Of Income Tax U.P Lucknow .

Manchanda, J.:— This is a case stated under section 66(1) of the Indian Income Tax Act, 1922, (hereinafter referred to as the Act). The question referred is:

“Whether on the facts and in the circumstances of the case, the firm was entitled to renewal of registration under section 26A for the assessment year 1959-1960?”

2. The material facts are these: The assessee Messrs Hiralal Jagannath Prasad of Banaras, a Hindu undivided family concern, was carrying on business at Banaras, inter alia, in Kirana and money lending. A partial partition qua the aforesaid business was effected on the 17th of July 1948 and, on the following day namely, 18th July, 1948, the members of the erstwhile Hindu undivided family formed themselves into a partnership for the purpose of carrying on the aforesaid business. An instrument of partnership was duly drawn up on 31st July, 1948 which was made operative from 18th July, 1948. According to the deed of partnership, which was in Hindi and an English translation whereof was annexed as annexure ‘A’ to the Statement of the Case, the firm consisted of six major partners. The opening paragraph of the deed mentions that the partnership deed is between the aforesaid six parties. The first party is Hira Lal. It is his son Ram Prasad who was admitted to the benefits of the partnership. The minor is not mentioned as one of the parties to the partnership deed. It is only in clause (3) of the deed that Ram Prasad is mentioned. That clause reads:

“3. That in the partnership business the share of the first party shall be 1/7th and in the same way the share of each of the other partner shall be 1/7th and each party shall be entitled to get the profits and be liable to bear the losses according to his share and the parties ‘have admitted Ram Prasad, minor son of Hira Lal Sahu the first party, to the benefit of partnership according to section 30 of the Indian Partnership Act and he also will get 1/7th share in profits of the firm.’’

(Underlining (here in) ours)

3. Clauses 7 and 9 of the deed run:

“7. That on the date when the parties commenced partnership business the capital of the parties in it was as given below and twelve thousand two hundred and thirty eight six annas one and half pies, belonging to the minor was also invested. It will be the duty of the parties to increase the capital so far as possible so that the partnership business may go on progressing and at all events no party will be entitled to withdraw any sum from the capital of the firm without the consent of the other partners:

1. Hira Lal Sahu First Party Rs. 12,238/6/3

2. Jagannath Prasad Second Party Rs. 12,238/6/1½

3. Ram Dass Third Party Rs. 12,238/6/1½

4. Bhagwan Dass — Fourth Party Rs. 12,238/6/1½

5. Gopal Dass — Fifth Party Rs. 12,238/6/1½

6. Shiva Prasad — Sixth Party Rs. 12,238/6/1½

8. That if any partner dies this partnership firm will not be dissolved but instead of the deceased partners his heirs will join the firm as partners and if any of them be a minor he will be admitted to the benefit of partnership under section 30 of the, Indian Partnership Act and the share of these heirs will be fixed out of the share of the deceased partner according to their shares.”

4. The firm constituted under the said instrument of partnership was being registered from the assessment year 1950-1951 upto the assessment year 1958-1959. In other words the firm was considered to be genuine in all respects and the provisions of section 26A were complied with. For the relevant assessment year 1959-1960, for which the previous year was Asarh Sudi 12, Sambat 2015, the assessee filed an application for renewal of registration under rule 6 of the Income Tax Rules, 1922. This application was signed by seven persons including the aforesaid Ram Prasad who had attained majority on the 6th of May, 1958, which fell during the relevant accounting period. A fresh instrument of partnership dated 5th June, 1958, was also drafted but that concerns the next assessment year and will not govern the proceedings for the registration or renewal of registration for the relevant assessment year. The Income Tax Officer Tweeted the application for the reason that the partnership deed does not specify the allocation of the remaining 1/7th share of the loss since there was specific agreement that six major partners shall each be liable to the extent of 1/7th share of the losses. “Thus the liability of the major six partners of the firm was to the extent of 6/7th of the losses only. If the partners had not made specific agreement regarding the sharing of losses the alternative plea of the assessee could have been that the total losses of the firm will be shared by the major partners of the firm in the same proportion in which they were sharing the profits. But since there is a positive agreement that each major partner is liable to 1/7th of the loss only, the share of loss to the extent of remaining 1/7th remains unspecified. At any stage and in the eventuality of there being loss in the firm in any year any partner can disown the loss over and above the extent which is covered by 1/7th falling to his share according to the specific agreement in clause 3 of the said instrument of partnership.” The registration was accordingly refused. The Appellate Assistant Commissioner confirmed the order of refusal. The Tribunal did likewise, holding that the registration was intended to confer benefits upon the partners and the conditions for obtaining such benefits required to be strictly complied with, and as there was no provision specifying as to who would bear the 1/7th share of the loss the partnership deed cannot be said to comply with the conditions under section 26-A which requires the instrument of partnership to specify the shares of each partner. Hence this reference at the instance of the assessee. The real question which arises in these cases is whether the firm which has applied for registration is a firm in existence and is constituted as shown in the instrument of partnership. This is what is provided in rule 4 of the Income Tax Rules which makes it obligatory upon the Income Tax Officer to grant registration by endorsing in writing at the foot of the deed of partnership that the firm is registered. In other words what is to be considered is whether the firm is really genuine one constituted under a deed of partnership wherein the share of each partner is specified. Section 26-A of the Act requires an application to be made in the prescribed form to the Income Tax Officer for registration on behalf of any firm which has been constitued under an instrument of partnership specifying therein the shares of partners. Under sub-section (2) of section 26-A of the Act the application has to be made in the prescribed form and “it shall be dealt with by the Income Tax Officer in such manner as may be prescribed” The Rules prescribe the form of the application and the manner ir which the application has to be disposed of the material portion of these Rules is as follows’

“2 Any firm constituted under an Instrument of partnership specifying the individual shares of the partners may, under the provisions of section 26-A of the Indian Income Tax Act, 1922, registered with the Income-tax Officer, the particulars contained in the said instrument on application made in this behalf.

3. The application referred to in Rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted, together with a copy thereof

5. Form I is the form prescribed for an application for registration Paragraph 2 of the form requires a statement that the original instrument of partnership specifying the individual shares of the partners is enclosed. Paragraph 3 of the form reads:

“3. We do hereby certify that the profits (or loss if any) of the previous… year…will be divided or credited as shown in Section B of the Schedule.” There is a foot note appended which reads:

“Note — This application must be signed personally by all the partners (not being minors) in the firm as constituted at the date on which the application is made, or where the application is made after dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal Representative of any such person who is deceased”

6. Thereunder is Schedule ‘A’ and then Schedule ‘B’ In column 1 of Schedule ‘A’ the names of all the partners are to be given and in column 6 the “share in the balance of profits (or loss (annas and Dies in the rupee) Then follows Schedule ‘B’ which only applies if the application is made after the end of the relevant previous year this is followed by two foot-notes and it is note no. 2 which is material this reads:

“(2) If any partner is entitled to share in profit? but is not liable to bear a similar pioportion of any losses this fact should be indicated by putting against his share in column 6 the letter “p””

7. Then follows rule 4 the material ??? which reads:

“4(1) If, on receipt of the application referred to in Rule, 3 the Income Tax Officer is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate in the following form, namely:—

(2) If the Income-tax officer is not so satisfied, he shall pass an order in writing refusing to recognise the instrument of partnership, or the certified copy thereof, and furnish a copy of such order to the applicants.

8. It may be notificed that in section 2(6-B) of the Act it is provided that “firm”, “partner” and “partnership” shall have the same meaning as the Indian Partnership Act, 1932, provided that the expression “partner” includes any person who being a minor has been admitted to the benefits of partnership Section 4 of the Indian Partnership ship Act defines “partnership” as “between persons who have agreed to share the profits of a business carried by all or any of them acting for all.” Under the charging section 3 of the Act, a firm is made unit of assessment. Firms are then divided for purposes of the Act into registered and unregistered firms. An unregistered from is taxed as a unit and so is a registered firm. But, under the provisions of section 23(5) of the Act when the assessment comes to be made of a registered firm, though income tax payable by the firm itself is determined, after the amendment by section 14 of the Finance Act, 1956, with effect from 1st April, 1956, nevertheless, under sub-clause (ii) of section 23(5)(a) of the Act “the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined, Provided that if such share of any partner is a loss it shall be set off against his other income or carried forward and set off in accordance with the provisions of section 24”

9. The above provisions, go to show what the scheme of the Act in the matter of registration of firms is Although the income payable by the firm is to be determined, no income tax was to be assessed and the share of each partner in the profit and loss has to be taken and assessed in the hands of each individual partner at the rate applicable to his total income. The Income Tar Department is not directly concerned wit losses that any partner may incur that ??? a matter which vitally concerns the partner of the firm. If the loss is not proved or de temrined the loss will be carried forward and the partner will lose the benefit of at off against his other income being ??? forward and set off against the income ??? the following year. It is in this background that the provisions of section 26-A of the Act have to be considered. The object ??? Section 26-A of the Act, was only to prevent the firms which are bogus or colourable from obtaining the benefits thereunder and also to facilitate the Department in finding out exactly what the share of profit of each partner was, without having to hold another enquiry before apportioning those profits, and add them to the total income of the partner under section 23(6) and assess him on such share of profit at the rate applicable to his total income.

10. Therefore, the first requirement under section 26-A was that there should be an instrument of partnership. In other words, there should not be an oral partnership and secondly that the partnership deed itself should specify “the individual shares of the partners”. The Rules and in particular the prescribed form and the foot note make it abundantly clear as to what the phrase “specifying the individual shares” meant. In paragraph 3 of the form, under rule 3, it has to be certified what profits or loss, if any, will be divided or credited between the partners. In column 6 of the Schedule thereto what has to be set out is the sharp in the balance of profits or loss. Note (2) makes it clear that if there is any partner who is only to get the profits and not the losses, then in column no. 6 against his name only the letter ‘P’ is to be placed. In other words stress is only on the profits or loss, not on profit and loss. If it was intended that the share of every partner in profits as well as his share in the loss should also be set out then as pointed out by this Court in Lakshmi Trading Co. v. Commissioner of Income Tax, I.T Ref. No. 116 of 1962, D/- 7-4-1966 = (1966) 62, ITR (SN) 11 (All), column no. 6 could easily have been split up to provide one column for showing profit and the other for the share of loss of each partner. It was also pointed out that “no deed of partnership has been held to be invalid merely because the shares in profits are specified of all partners including those admitted merely to the benefits of the partnership, and there is no separate speciation of shares of the remaining partners who are to share losses indicating their separate shares in the losses Further, the rule and the form do not say that there should be any such calculation made by the assessee and entered in this form of application.” Therefore, merely because the share of losses is not specified will not make the deed invalid so as to prevent its being registered and much less if the share of losses has not been meticulously specified. In the present case, the Department and the Tribunal fell into the error of thinking that the share of the loss of each partner as specified was me-seventh A fair and liberal reading of he partnership deed as a whole, and in articular clause (3) leaves no doubt that he share of loss of the six partners wat mt one-seventh. Clause (3) specifies the share of the partner in the profits as one-seventh but when it comes to bearing of losses the figure one-seventh is eschewed and in its place the words used are. “and will be liable to bear the losses according to share.” Again, in that very clause, when it comes to the admission of the minor to the benefits of partnership it is provided: He also will get 1/7th share in the profits of the firm.” Before these words appear there is a specific reference to the provisions of section 30 of the Indian Partnership Act. To these circumstances there can be no warrant for assuming, as the authorities below have done, that the share of the losses of the six partners was 1/7th.

11. Even assuming for the sake of argument that the share of losses was 1/7th that would not justify the rejection of the application under Section 26A of the Act for the reason that if the shares in losses are not specified the revenue does not stand to lose in any manner. It must be remembered that Section 26-A is essentially a provision for the protection of revenues of the State and to ensure that bogus firms do not obtain registration. The burden of proving any loss is on the firm or its partners. If the loss is not established or the proportion in which the loss has to be carried forward is not specified, then it is the partners who may lose the benefit to that extent by their inability to have the share of loss set off against their other income or to have it carried forward for being set off against profits in later years. That cannot be a legitimate ground for refusing registration to a firm. The provisions of Section 23(5)(a) and 23(6) of the Act are only for the benefit of the assessee and if he does not want that benefit, either by specifying the share in the losses correctly or specifying the share of losses at all then it is the partners thereof who will suffer and not the revenue. In this view of the matter we would, respectfully differ from the view taken by the Gujarat High Court upon which the learned Standing Counsel relied in Thacker and Co. v. Commissioner of Income-tax. Gularat (1966) 61 TTR 540 (Guj).

12. It only remains to observe that the manner in which we have interpreted the partnership deed is supported by two recent decisions of the Supreme Court. In Commissioner of Income-tax Mysore v. Shah Mohan Dass Sadhuram (1965) 57 ITR 415 : (AIR 1966 SC 15), thesharee of the partners were not even specified and all that was agreed was that the profits and loss will be “distributed pro rata according to the proportion of the capital investment the earlier case in Commissioner of Income Tax Bombay v. Dwarka Dass Khetan and Co. (1961) 41 ITR 528 : (AIR 1961 SC 680) was referred to and it was observed that: “But the facts in that case were that in the instrument of partnership Kanti Lal Keshar Deo was decried it a full partner entitled not only to a share in the profits but also liable to bear all the losses including the loss of capital. It was also provided that ‘all the four partners were to attend to the business and if consent was needed all the partners including the minor had to give their consent in writing. The minor was also entitled to manage the affairs of the firm including the inspection of the account books and was given the right to vote, if a decision on votes had to be taken’”. Therefore, that case was a decision on its own peculiar facts. It was further observed: “It follows from the above discussion that as long as the 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 if the contract is for the purposes mentioned above. … It need hardly be stated that the partnership deed must be construed reasonably.’ In Commissioner of Income Tax v. Shah Jethaji Phul-chand (1965) 56 ITR (SN) 25, the Supreme Court reiterated that the partnership deed must be construed reasonably.

13. On the facts of the present case, the partnership, deed construed reasonably and as a whole cannot possibly lead to the conclusion that the minor was admitted as a full partner. It specifically stated that he was admitted subject to the provisions of section 30 of the Partnership Act only to the benefits of partnership and that his share in the profits was one-seventh and not in the losses. For the reasons given above the question referred is answered in the affirmative and in favour of the assessee. The reference is answered accordingly. The Department will pay the costs of the assessee which we assess at Rs. 250/- Counsel's fee is also assessed at Rs. 250/-

G.G.M

14. Reference answered accordingly.

M/S. Hiralal Jagannath Prasad v. Commissioner Of Income Tax U.P Lucknow .

Summary of Legal Opinion — Manchanda, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Respondent (Income Tax Department) / Revenue Arguments

Appellant (Assessee) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

M/S. Hiralal Jagannath Prasad v. Commissioner Of Income Tax U.P Lucknow .

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