CIT Vs. RAJ KAMAL STORES

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court : 'Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was legally correct in holding that the shares of the adult partners in loss were specified in the partnership deed dated 11 -12 -1972 and, therefore, the assessee was entitled to the benefit of registration?'

(2.) THE facts giving rise to the present reference are as follows : The reference relates to the assessment years 1974 -75 to 1976 -77.

(3.) THE assessee -respondent is a firm which was constituted by an instrument of partnership executed on 11 -12 -1972. There are five partners in the firm. Besides, a minor Shri Raju Barman was also admitted to the benefits of partnership according to section 30 of the Indian Partnership Act, 1932. Clause 5 of this deed is reproduced below : 'That, at the close of each the account of the firm shall be prepared after adjusting all the business expenses and in case of profit the same shall be credited to the respective accounts of each partner according to their shares as mentioned in para 3 and in case of loss the same shall be borne by the partners according to their shares, and the amount of loss shall be debited to their respective accounts according to their shares. Besides this Shri Raju Barman minor shall get the benefit of partnership as specified in para 3 and shall also be liable for the loss to the extent of his share according to section 30 of Indian partnership Act.'