DHARAM CHAND KEDAR NATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a case stated under section 66(2) of the Income-tax Act, 1922. The question referred is :

(2.) THE material facts are these : THE assessee is a firm. It consisted of four adult and one minor. THE relevant year of assessment is 1956-57. THE fourth partner was one Chandrika Prasad and it was his son, Jhabboo Lal, a miner, who was said to have been admitted to the benefits of partnership. THE firm was constituted under a deed of partnership dated 22nd October, 1949. THE preamble to the partnership deed reads :

(3.) LEARNED counsel for the assessee contends that the deed should be read as a whole, and, if that was done, it would be obvious that there was only typographical error in clause (4) where all the five partners were shown to have an equal share both in profit and loss. He also relied on the course of conduct of the department in having registered this deed of partnership from 1951-52 to 1955-56. This contention has no force. The intention undoubtedly had to be gathered from the partnership deed read as a whole and as laid down by the Supreme Court in Commissioner of Income-tax v. Shah Mohandas Sadhuram, the deed of partnership must be construed reasonably. In the Supreme Court case there was, however, no clause as in the instant case regarding the sharing of loss by the minor. In Commissioner of Income-tax v. Shah Jethaji Phulchand, 1965 57 ITR 588, a decision delivered on the same date by the Supreme Court as in Shah Mohandass case, it was reiterated that the Partnership deed should be construed reasonably. In this case, although the minor was described as a full partner, nevertheless, it was, on reading all the classes of the deed, held that he was only admitted to the benefits of the partnership. In coming to this conclusion the Supreme Court was influenced mainly by the fact that in clause (9) of that agreement, the minor, though described as a partner, was not made to bear the losses of the firm. In clause (9) it was provided :