COMMISSIONER OF INCOME TAX Vs. SHANKAR COTTONS

JUDGEMENT

(1.) AS per the directions of this Court under s. 256(2) of the IT Act, 1961 (in short, "the Act"), the Tribunal referred the following two questions for the opinion of this Court :

(2.) THE assessee is a partnership-firm, called Shankar Cottons, Coimbatore. THE assessee filed an application for registration of the firm for the asst. yr. 1975-76. THE partnership was constituted under a deed, dt. 21st April, 1974, to carry on the business in partnership as brokers and agents for textile mills and such other business as agreed upon between them mutually. THE partnership firm consists of two partners, viz., P. S. Ramachandran and S. N. Ramachandran, each having 12-1/2 per cent share in profit and 50 per cent in loss. Miss Gita, Master Ramani and Master Shankar were admitted to the benefits of the partnership with 25 per cent of share in profit for each of the minors. Miss A. Gita is aged about 21 years. She has been treated as a minor because she was deaf and dumb person. Since a minor alone can be admitted to the benefits of the partnership, the ITO came to the conclusion that the partnership is invalid and, accordingly, he refused to grant registration and assessed the entity as an AOP.

(3.) IN view of the abovesaid legal position, we are unable to subscribe to the view taken by the Tribunal in holding that the assessee-firm herein is also entitled to registration under s. 184 of the IT Act, 1961, even though a major was admitted to the benefits of partnership. Accordingly, we answer question No. 1 referred to us in the negative and in favour of the Department. IN so far as question No. 2 is concerned, it does not arise out of the order of the Tribunal. There will, however, be no order as to costs.