Decided on August 28,1962



Y.S.TAMBE, J. - (1.)THIS is a reference under Sub -S. (1) of S. 66 of the Act and it arises out of the rejection of application under S. 26A of the Indian IT Act for getting the alleged partnership constituted under a partnership deed of 28th Oct., 1955, registered.
(2.)THE facts material in brief are : We are here concerned with the asst. yrs. 1956 -57 and 1957 - 58. One Mehdi Hasan Laljee and his wife, Bai Jenubai, were carrying on a business in partnership, Mehdi Hasan having 14 annas share and Jenubai having two annas share therein. The income from this partnership, however, was being assessed in the hands of Mehdi Hasan as an individual. According to the applicant no objection to this procedure was raised by Jenubai in view of the provisions of S. 16 of the Act. On 25th June, 1949, Mehdi Hasan made a will in respect of his 14 annas share in the partnership business. Clause 13 of the will, which is material for the purpose of this reference, is in the following terms :
"My trustees shall hold my share in the said business upon trust for my sons in equal shares and upon each son of mine attaining the age of majority he shall elect whether he shall become a partner in the said business and if and when each son of mine intimates to trustees in writing his desire to become a partner in the said business he shall be admitted as such partner forthwith. Till such time as each son of mine attains majority and elects to become a partner, his share of profits of the said business shall be accumulated. The share of profits of each son shall be handed over to each son on his attaining majority whether or not he elects to be a partner."

Mehdi Hasan Laljee died on 9th Nov., 1949, leaving behind three sons, all minors at that time. Upon the death of Mehdi Hasan Laljee, assessment was made on Bai Jenubai in her capacity as legal representative of Mehdi Hasan Laljee, but that appears to be only for that year. Thereafter, the assessments up to the year 1957 -58 were made on the executors appointed under the will in the status of an AOP. Assessment orders for the years 1953 -54 to 1957 -58, however, appear to have been set aside by the Tribunal in order to determine the correct status in which the executors should be assessed. One of the sons of Mehdi Hasan Laljee by name Hadi Mehdi Hasan attained majority on 20th Oct., 1955. Thereafter, on 28th Oct., 1955, a deed of partnership has been executed by Jenubai and Hadi Mehdi Hasan Laljee (the son, who had attained majority) admitting the other two minor sons to the benefits of partnership. The profit -sharing ratio as stated in the deed was as under :

(3.)FOR the asst. yrs. 1956 -57 and 1957 -58 an application was made under S. 26A of the Act to get the firm brought into existence under the partnership deed of 28th Oct., 1955, registered under the said provisions. This application was rejected both by the ITO as well as by the AAC. The further appeal taken by the applicant before the Tribunal also failed. In dismissing the appeal the Tribunal observed :
"Ignoring this clause (cl. 13), when only one of the sons had attained majority, the partnership deed between Jenubai and Hadi, the son who had attained majority, was entered into, admitting the minors to the benefits of the partnership. Manifestly, Jenubai and Hadi were incompetent to make any such contract of partnership contrary to the clear provisions of the will. The partnership could only have been entered into between the executors or trustees of the will for and on behalf of the minors and Jenubai and the major son. The executors or trustees are not made partners in this firm. The will does not even give the executors the power of admitting the minor to the benefits of partnership. The conditions are stringent. The minor must not only first attain majority, but before he can become a partner, he must intimate his desire to become a partner in the said business and then only can he become a partner."

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