RAY, J. - (1.) THE assessee firm applied for registration under s. 26A of the IT Act on the basis of an instrument of partnership dated 21st July, 1950. THE parties to the agreement were Tolaram Dugar and his three sons, Hanumanmall, Naurathmall and Surajmall, the last one being a minor represented by his mother and natural guardian, Monohari Devi, and Routhmall Dugar and his sons, Keshrichand, Motilal and Chhatarsingh, the last one being a minor represented by his mother and natural guardian, Bhawani Debi. In the agreement it is stated that Tolaram and his sons, Hanumanmall, Naurathmmall and Surajmall, constituted a HUF and Routhmall and his sons, Keshrichand, Motilal and Chhatarsingh, constituted another HUF and that these tow HUF were carrying on business in partnership under an agreement dated 24th Nov., 1937, under the name and style of Rupchand Routhmall. It is further stated in the July, 1950, agreement that the two HUF were partitioned and there was an agreement of of partition on 30th March, 1950. It was stated in the agreement of July, 1950, that for the benefit of the minors it was agreed that they should remain joint with their respective fathers and that Tolaram and Routhmall, who were the Kartas of the two HUF, agreed to admit their respective sons, Hanumanmall, Naurathmall, Keshrichand and Motilal, as partners in the business carried on under the name and style of Rupchand Routhmall. THE share of Tolaram jointly with his minor son, Surajmall Dugar, was put down as four annas and similarly, Routhmall jointly with his minor son was entitled to a four annas share. THE remaining parties were each allotted two annas share. Though the partnership deed was executed in July, 1950, retrospective effect was given from March, 1950. THE IT authorities rejected the application on the grounds, firstly, that the shares of Tolaram and Routhmall were collectively shown as four annas each though they were shown as distinct partners and thus the shares of the individual partners were not specified and, secondly, that profits and losses had to be shared by all the partners in accordance with their shares with the result that the minors were made liable for the losses as partners and minors could not enter into such partnership agreements.
(2.) THE assessee firm preferred an appeal and contended that Tolaram and Routhmall were two HUF, each family consisting of a father and minor son and a share of four annas was allotted to each of such undivided families and, therefore, the shares were not unspecified. THE Tribunal held that Tolaram and Routhmall who admitted the adult sons as partners were Kartas of the erstwhile HUF as well as of the truncated HUF and that the minors were not partners and, therefore, the firm was entitled to registration. On these facts the following question of law has been referred : "Whether on a proper construction of the deed of partnership dated 21st July, 1950, the assessee was a firm entitled to registration under s. 26A of the Indian IT Act and w.e.f. 21st July, 1950 ?" Counsel for the CIT contended, firstly, that by the document of partnership minors were in fact shown as having shares in the business, secondly, that it was impossible to ignore the minors by saying that the contract was really between HUF consisting of the father and minor son because there is no such joint family after severance of the undivided families and, thirdly, if the minors are partners the shares of the minor and his father remain unspecified. Counsel for the CIT referred to the deed of partnership dated 21st July, 1950, and contended that though the minors did not sign the deed they were parties to the deed. In support of the contention reliance was placed on the recitals that the parties agreed to carry on the business in co-partnership with one another and that the parties thought it fit and desirable to lay down and specify in writing the shares of the parties as also the terms and conditions under which the business was to be carried on. Secondly, it was contended that cl. 2 of the July, 1950, agreement stated that the parties were to bear profit or loss in the business and it was not open to the Tribunal to rewrite the agreement by holding that the minor is not to bear the loss and, thirdly, that registration can be granted only on the agreement between the parties and on the covenants set out and that there could not be registration of an agreement by adding something thereto or subtracting something therefrom. Counsel for the CIT laid emphasis on the agreement of partition dated 30th March, 1950, and contended that unless there was a general partition the mother would not be entitled to a share and that the mother's share could not be relinquished in favour of her husband and three sons including the minor. It is true that in the agreement for partition it is stated that the father will remain joint with the minor son and further that in the partnership agreement of 21st July, 1950, it is stated that the father is entitled jointly with his minor son to a four annas share but it was contended that it does not mean that there is a joint family. After there has been severance of the joint family by a general partition there has to be an agreement to reunite and a minor cannot enter into an agreement to reunite. Therefore, counsel for the CIT contended that the minor could not claim to have reunited and become a joint family with his father.
(3.) COUNSEL on behalf of the assessee contended that since it was stated in the deed of partition dated 30th March, 1950, that the father and minor son were to continue to remain joint there was a partial partition and there was a truncated joint family out of the erstwhile joint family . It was also contended that the partnership agreement of July, 1950, was not signed either by the minor or anyone on his behalf and the minor was not admitted to the benefits of partnership, for the deed of partnership was not an agreement to that effect, and, finally, the recital that Tolaram and Routhmall agreed to admit 2nd, 3rd, 6th and 7th parties as partners had the result that the minor was not a partner and the fathers, Tolaram and Routhmall, were partners in their capacity as Karta of their respective families consisting of them and their respective minor sons. The agreement of partition dated 30th March, 1950, shows that there were two undivided families one consisting of Tolaram's branch and the other consisting of Routhmall's branch and that there were dissensions between the members of the two undivided families. The mother who was entitled to a share on partition expressed an intention not to participate in the business and accordingly gave away her share in the business and capital equally in favour of her husband and three sons. In the operative part of the agreement of partition it is stated that the parties placed on record that the HUF has been divided among the parties. The result in my opinion is that there is a severance of the joint family and there is division of the shares and thereafter the father and the minor son remain joint in a loose sense for the sake of convenience. Clause 6 of the partition agreement states that the minor remained joint with his father and that the minor's share of capital and profit shall be amalgamated and credited to the account of the father. In this context the words "jointly with his minor's son" in the partnership agreement show that the minor has a share in the partnership but the extent of it is not specified in the partnership agreement.;