JUDGMENT

1. This reference under section 256(1) of the Income-tax Act, 1961, relates to the assessment year 1962-63 and here we are concerned with the question of interpretation of the deed of partnership dated November 9, 1959. For better appreciation of the question involved in this reference it is, therefore, necessary to set out some of the relevant facts and the same may, briefly, be stated.

2. The assessee-firm originally consisted of seven parties. Sri Hariprasad Ghanshyamdas, Narayana Prasad, Shivnarayan and Soorajmal, sons of Ram Sahay (decd.), Mannalal, Madanlal, son of Shivnarayan and Mohanlal, minor son of Mannalal. Such firm was constituted under the deed of partnership dated May 17, 1957. Madanlal died on October 5, 1959, and another deed of partnership was executed on November 9, 1959, which took effect from October 6, 1959. Thus, for the assessment year 1960-61 there were two periods: the first period was from November 11, 1958, to October 5, 1959, and the other was from October 6, 1959, to October 31, 1959. For the first period the assessee-firm applied for renewal of registration and so also for the second period. The Income-tax Officer rejected both the applications for the reason that in respect of the first period, Mohanlal, minor, had been described as a full partner and the loss of the business had been actually allocated to his share as well. For the second period also he gave the same reasons. We are, however, not concerned with the assessment year 1960-61 in this reference. For the assessment year 1962-63, with which we are concerned in this reference, the Income-tax Officer refused registration on two grounds: firstly, that no application for registration had been filed and, secondly, that the minors had been shown as full-fledged partners.

3. The assessee-firm filed three appeals against these three orders before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner disposed of those appeals by separate orders and he agreed with the Income-tax Officer. For the assessment year 1962-63 he, however, held that it was not correct to say that no application for registration had been given. He found that the assessee-firm had given an application on June 30, 1962, but it was delayed by about 8 months and as there was no sufficient cause shown to explain the delay, the registration could not be granted on that ground as well.

4. Being aggrieved by the said order of the Appellate Assistant Commissioner the assessee-firm preferred three appeals before the Tribunal and they were disposed by the Tribunal by a consolidated order dated August 22, 1970. So far as the assessment year 1962-63, with which we are concerned in this reference, the Tribunal, after discussing the contentions of the assessee and the revenue made before it and also considering the cases cited before it, held that registration of the assessee's partnership was rightly refused for the said year. The Tribunal held that:

“In our opinion, on a reasonable construction of the document, it is not possible to hold that Mohanlal was admitted to the benefits of partnership with the consent of all the adult partners. With regard to Mohanlal the position to all intents and purposes remains the same as was under the previous partnership deed. Therefore, for the second part of the assessment year 1960-61 and the assessment year 1962-63 registration on the basis of this partnership deed could not have been legally granted and has been rightly refused.”

5. In the aforesaid circumstances and on the application of the assessee, the following question of law has been referred by the Tribunal to this court:

“Whether, on the facts and in the circumstances of the case, the Tribunal, while considering the provisions of the partnership deed dated November 9, 1959, was correct in holding that Mohanlal was not admitted to the benefits of the partnership with the consent of all the adult members and that on the basis of this partnership deed registration for the assessment year 1962-63 could not have been granted to the assessee-firm?”

6. Learned counsel for the assessee submitted that in this case the registration on the basis of the partnership deed dated November 9, 1959, was improperly refused by the revenue. He has further submitted that it cannot be said that by the 1959 deed, Mohanlal, a minor, has been treated as a full-fledged partner and as such the said deed cannot be said to have contravened any provision of the Indian Partnership Act, 1932. According to the learned counsel effect should be given to the words “the term ‘partner’ includes a minor given the benefits of partnership” appearing in the deed after the name of Mohanlal. The qualification after Mohanlal's name, learned counsel has submitted, will prevail wherever Mohanlal's name appears in the deed and this will also govern the right and liability of Mohanlal in the partnership. It is the submission of the learned counsel that for the purpose of section 26A of the Indian Income-tax Act, 1922, the deed of partnership should be construed reasonably and the said deed, when so construed, it cannot be said that the minor, Mohanlal, has been treated as a full-fledged partner and has not been given only the benefits of the partnership. Learned counsel, therefore, has contended that the 1959 deed does not go beyond section 30 of the Partnership Act, 1932. He has also referred to section 2(33) of the Income-tax Act, 1961, which states, inter alia, that the expression “partner” shall also include any person who, being a minor, has been admitted to the benefits of the partnership and also to rule 2 and rule 22(2) of the Income-tax Rules, 1962. In support of his contention reliance has been placed by the learned counsel on the cases of Commissioner of Income-tax v. Shah Jethaji Phulchand [1965] 57 ITR 588 SC., Commissioner of Income-tax v. Shah Mohandas Sadhuram, Jeewanram Gangaram v. Commissioner Of Income-Tax, West Bengal* [1967] 64 ITR 483 Cal. and Krishna and Brothers v. Commissioner of Income-tax [1968] 69 ITR 135 Ker.. Learned counsel has stated that the case of Commissioner Of Income Tax, Bombay v. Dwarkadas Khetan & Co. [1961] 41 ITR 528, 533 SC., relied upon by the Tribunal, are distinguishable because in the Supreme Court case a minor was made a partner, which is not the case here. Learned counsel concluded his submission by saying that from the 1959 partnership deed, if it is reasonably construed, it will appear that Mohanlal has only been admitted to the benefits of the partnership and, therefore, according to the learned counsel, registration was improperly refused.

7. Counsel for the revenue, however, submitted that the partnership deed of 1959 should be read and construed in the light of its dominant clause which according to him is:

“And whereas the parties of the first to the sixth parts in appreciation of the services of the deceased partner, agree to give the party of the seventh part the benefits of partnership”

8. And this clause refers only to Nanda Kishore Vijaivargiya. Therefore, according to the learned counsel, the partnership deed when reasonably construed, will show that the minor, Mohanlal, has not been admitted to the benefits of the partnership but has been treated as a fullfledged partner and given all the rights and subjected to all the liabilities of a partner. Hence, according to the learned counsel, the deed goes beyond section 30 of the Indian Partnership Act, 1932, and registration was rightly refused. Learned counsel has relied on the case of Commissioner Of Income Tax, Bombay v. Dwarkadas Khetan & Co. He has also referred to the cases in Commissioner of Income-tax v. Shah Jethaji Phulchand [1965] 57 ITR 588 SC. and Commissioner of Income-tax v. Shah Mohandas Sadhuram.

9. Before dealing with the contentions of the parties it would be convenient to deal with the cases cited before us.

10. In the case of Commissioner Of Income Tax, Bombay v. Dwarkadas Khetan & Co. , the Supreme Court held that the definition of partner in section 2(6B) of the Indian Income-tax Act, 1922, was designed to confer equal benefits upon the minor by treating him as a partner, but it did not render the 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. The Supreme Court observed:

“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 the 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.”

11. In the case of Commissioner of Income-tax v. Shah Jethaji Phulchand and again following the said decision in the case of Commissioner of Income-tax v. Shah Mohandas Sadhuram, the Supreme Court while dealing with section 26A of the Indian Income-tax Act, 1922, observed that the partnership deed must be construed reasonably.

12. In the case of Jeewanram Gangaram v. Commissioner Of Income-Tax, West Bengal*, the partnership deed of the appellant-firm consisting of two minors represented by their guardian mother specifically stated that the two minors were only admitted to the benefits of the partnership. The deed, however, provided that the profits and losses of the partnership would be distributed amongst the partners in shares specified against their names which included the names of the minors also. The deed further provided that the responsibilities of the management of the partnership would equally rest with each of the partners. The officer granted registration for all the subsequent years up to 1957-58. The Commissioner of Income-tax, however, acting under section 33B of the Indian Income-tax Act, 1922, cancelled the registration for 1957-58 and directed the officer to treat the firm as an unregistered firm and tax accordingly on the ground that the minors had been made full partners and they had signed the application for registration and hence the grant of renewal of registration to the firm was prejudicial to the interests of the revenue. The assessee's appeal to the Tribunal failed and on a reference to the High Court under section 66(1) it was held that the various clauses in the partnership deed should be read in the context of the specific statement in the deed that the minors were only admitted to the benefits of the partnership: the clause in the partnership deed relating to sharing of losses could only mean that only the share of the minors in the partnership was intended to be made liable for losses but the minors were not to be made personally liable for the losses; the responsibilities of the minors for mismanagement would also be limited only to their share in the partnership and not personally; and the firm was validly constituted under the deed and was hence entitled to be registered.

13. In the case of Krishna and Brothers v. Commissioner of Income-tax, the partnership deed provided that a certain minor had been admitted to the benefits of the partnership but also contained a further provision that the profits and losses should be borne by the partners in proportion to their shares, and the registration of the partnership under section 26A was refused on the ground that the clause relating to the share of losses by the minor contravened section 30(3) of the Indian Partnership Act, 1932. It was held by the Kerala High Court that section 30(3) of the Indian Partnership Act only prohibited the imposing of any personal liability on the minors; all that it did, in effect, was to provide that the shares of the minors were liable for the acts of the firm. That was permissible under sub-section (3) of section 30 of the Indian Partnership Act, 1932, and refusal of registration could not be sustained. The short point which falls for determination in this reference is whether on a reasonable construction of the 1959 deed can it be said that the minor, Mohanlal, has been treated as a full partner or he has been only admitted to the benefits of the partnership. The answer to the question, in our opinion, depends on the view we take about the said deed. It is, therefore, necessary to set out the relevant portion of the deed.

14. The deed of agreement is made on the 9th day of November, 1959, to record the agreement already reached and acted upon since the 6th day of October, 1959, between (1) Shri Hariprasad Vijaivargiya (hereinafter called the “first party”) of the first part, (2) Shri Ghanshyamdas Vijaivargiya (hereinafter called the “second party”) of the second part, (3) Shri Shivnarayan Vijaivargiya (hereinafter called the “third party”) of the third part, (4) Shri Narayan Prasad Vijaivargiya (hereinafter called the “fourth party”) of the fourth part, (5) Shri Soorajmal Vijaivargiya (hereinafter called the “fifth party”) of the fifth part, (6) Shri Mohanlal Vijaivargiya, a minor represented by his guardian uncle, Shri Hariprasad Vijaivargiya (hereinafter called the sixth party”) of the sixth part, all partners (the term “partner” includes a minor given the benefits of partnership) of Messrs. Hariprasad Madanlal Vijaivargiya of Akra Phatak, P.O, Bartala, District 24-Parganas (as also of Akra Station, P.O Batanagar, Dist. 24-Parganas) registered under the Indian Partnership Act, 1932, with the Registrar of Firms, in July, 1957, the registration number being 32347 (Memo. No. 34707) and (7) Shri Nanda Kishore Vijaivargiya, a minor son of late Madanlal Vijaivargiya, at Akra Station, P.O Batanagar, Dist. 24-Parganas represented by guardian uncle, Hariprasad Vijaivargiya (hereinafter called the “seventh party”) of the seventh part, and witnesses as follows:

“Whereas the parties of the first to sixth parts together with Shri Madanlal Vijaivargiya of Akra Station, P.O Batanagar, P.S Maheshtalla, District, 24-Parganas, were partners in the aforesaid firm, M/s. Hariprasad Madanlal Vijaivargiya, and were bound as such under a deed of partnership executed on the 17th day of May, 1957, hereinafter referred to as the ‘partnership deed’.

And whereas the aforesaid Shri Madanlal Vijaivargiya died on the 5th of October, 1959, afternoon and the son of the deceased partner, the party of the seventh part has been desirous of getting the benefits of partnership.

And whereas the parties of the first to the sixth parts in appreciation of the services of the deceased partner, agreed to give the party of the seventh part the benefits of partnership.

Now, therefore, this deed witnesses that in pursuance of the said agreement, it is mutually agreed as follows:

1. The parties hereto shall from the 6th day of October, 1959, continue to be partners subject in all respects to the conditions, stipulations and provisions of the aforesaid ‘partnership’, so far as applicable, and except as varied by this deed of agreement.

2. The parties of the first to the sixth parts shall have the amounts standing as balances in their respective accounts on the 5th day of October, 1959, as their respective shares in the capital of the business on the 6th day of October, 1959, and the party of the seventh part shall get as his capital on the 6th day of October, 1959, the amount which stood in the share of the deceased partner, in the last balance-sheet.

3. The profits and losses of the partnership shall be and continue to be borne by the partners hereto in the following proportions:

(1) Shri Hariprasad Vijaivargiya 0-3-0 (three annas in the rupee). (2) Shri Ghanshyamdas Vijaivargiya 0-2-6 (two annas six pies in the rupee). (3) Shri Shivnarayan Vijaivargiya 0-2-6 (two annas six pies in the rupee). (4) Shri Narayan Prasad Vijaivargiya 0-1-6 (one anna six pies in the rupee). (5) Shri Soorajmal Vijaivargiya 0-1-6 (one anna six pies in the rupee). (6) Shri Mohanlal Vijaivargiya 0-2-6 (two annas six pies in the rupee). (7) Shri Nanda Kishore Vijaivargiya 0-2-6 (two annas six pies in the rupee). ”

15. In the deed set out above two things need be noticed: (i) after the name of the 6 parties it is stated that “the term ‘partner’ includes a minor given the benefits of partnership”, and (ii) in the recital it is stated that parties of the first to the sixth parts have agreed to give the party of the seventh part the benefits of the partnership. Now, the question is whether the rest of the deed must be coloured by or read in the light of the said two provisions or only the provision (ii) stated above. That is the controversy between the parties to the reference. According to the revenue provision (ii) mentioned above is the dominant clause and would govern other clauses of the deed while according to the assessee the rest of the deed must be governed by both the provisions mentioned above. In our view a deed is to be read and construed as a whole and, if possible, effect should be given to all parts thereof. In other words, the general intention is to be collected from the instrument as a whole and that intention should be inferred from the general form of the deed. See Odger's Construction of Deeds and Statutes, fifth edition, page 55. This would be more so when a deed is to be construed reasonably. The way in which the learned counsel for the revenue wants us to read the deed would amount to deletion or not giving effect to a part of the deed which represents the intention of the parties to the deed. Unless a part of a deed is so inconsistent with the rest of it that no effect can be given to it, that part should be read and given effect to while construing a deed. Further, while construing a deed, one should bear in mind the principle of construction as stated in Odger's Construction of Deeds and Statutes, fifth edition, at page 54. It is stated thus:

“The law is anxious to save a deed if possible. This is sometimes expressed in the maxim utnes magis valeat quam pareat. If by any reasonable construction the intention of the parties can be arrived at and that intention carried out consistently with the rules of law, the court will take that course.”

16. In our opinion, on a reasonable construction of the 1959 deed, the clause governing the rights and liabilities of the parties to the deed should be read in the light of the two provisions thereof mentioned above. The deed, when so construed, the expression “partner” appearing therein would refer not only to the full partners but also the minor who has been given the benefits of the partnership. The other clauses of the deed including the clauses governing the rights and liabilities of the parties thereto should be read in that context. In the aforesaid view of the matter and following the principles laid down in the said decisions of the Supreme Court, in our opinion, the partnership deed reasonably construed only confers benefits of the partnership on the minor, Mohanlal, and does not make him a full partner. In our view the deed cannot be said to go beyond the provisions of section 30 of the Indian Partnership Act, 1932, and, there-fore, it cannot be regarded as invalid. As, in our opinion, the partnership deed dated November 9, 1959, is a valid document refusal of its registration cannot be upheld. In the aforesaid view of the matter we answer the question in the negative and in favour of the assessee. In the facts and the circumstances of this case, wc do not make any order as to costs.