COMMISSIONER OF INCOME-TAX, MADRAS Vs. NVABDULLA SAHIB,

JUDGEMENT

(1.) The assessee constitute a firm trading in timber under the style of N. V. Mammaly & Sons. Before the year 1939-40 the firm had been registered under section 26-A of the Income-tax Act, and on the 10 October 1939, and application for a renewal of the registration was made. Three weeks later N. V. Abdulla Sahib, the senior partner, died and his death resulted in the reconstitutions of the firm. His widow was taken in as a partner and his three sons and three daughters, all of whom are minors, were admitted to the benefits of the partnership. In the application for the registration of the new firm under Section 26-A the shares of the partners were stated to be :- N. V. Ummerkutty, six annas : N. V. Kayumma, two annas; N. V. Mariumma, two annas and K. Bibi (the widow of N. V. Abdulla Sahib) six annas. K. Bibi had not in fact a six annas share in the partnership. Her share was two minors, the remaining four annas being intended for the benefit of the minors, who were admitted to the benefits of the partnership as a body and not as individuals. Clause 5 of the partnership deed states;-

(2.) That the said six minor children, viz., three sons and three daughters of said late N. V. Abdulla are hereby agreed and declared to be admitted to the benefits of the said partnership. They shall as a body be jointly entitled to 2/8 share of the net profit of the business, if any, and the said body shall for the purposes of the partnership be regarded as a unit or a single individual so that the benefits of the partnership hereinbefore agreed and declared shall enure and accrue to them and the survivors of them at the time when the accounts of the partnership are taken from time to time.

(3.) Clause 16 of the deed reads as follows :- That in the even of any of the children of said late N. V. Abdulla attaining the age of majority as and when each child of his should attain such majority, he or she shall be called upon by the firm or its Managing Partner to elect to become a partners in the business or not do so, and if her or she should elect to become partner, then his or her share of profits shall be may be agreed to between the parties hereto and him or her as the case may be. But if he or her should elect not to be become a partner then he or she shall be entitled, in the manner hereinafter provided, to the payment of the what may stand in his or her credit in the separate account and also to his or her proper share in the share of profits standing on such date to the credit of the body of minor children of said late N. V. Abdulla. The total amount of profits standing at any time to the credit of the minor children of said late N. V. Abdulla as a body as herein before provided shall at the time of division or whenever required be divisible equally among all the children alive at the time without reference to the sex of the children or shares under Muhammadan Law. And it is also here by expressly declared and provided that if at any time the amount due to any of the children of at N. V. Abdulla under his or her separate account, or as his or her proper share in the profit account, the same shall be payable by the firm only on the expiry of one year from the date of demand or intimation.