Om Prakash, J. - (1.) THE Income-tax Appellate Tribunal (Allahabad Bench, Allahabad), referred the following question relating to the assessment year 1974-75 for the opinion of this court under Section 256(1) of the Income-tax Act, 1961 (briefly, "the Act") : "Whether, on the facts and in the circumstances of the case, the assessee was rightly allowed registration under Section 185 of the Income-tax Act, 1961 ?"
(2.) THE Assessing Officer in his order passed under Section 185(1)(b) of the Act held that the partnership deed is defective and the firm is not entitled to registration. The constitution of the assessee-firm is as under : JUDGEMENT_625_ITR231_1998Html1.htm Besides the major partners following minors were also admitted to the benefits of the partnership : JUDGEMENT_625_ITR231_1998Html2.htm
(3.) CLAUSE 5 of the partnership deed is as under : "That at the close of each year the account of the firm will be prepared after adjusting all the business expenses and in the case of profit the amount of profit shall be credited to the respective accounts of the partners according to their shares as specified in para 3 and in the case of loss the amount of loss shall be borne by the partners according to their shares." Interpreting Clause 5 of the partnership deed, the Assessing Officer observed as under : "From the above it is clear that the ratio in which the loss falling to the shares of the minors are to be shared by the major partners has not been clearly specified in the deed." ;