| Case ID |
0393718b-c8a2-4020-a99c-6d0cdcfd92a2 |
| Body |
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| Case Number |
IT REFERENCE Nos. 637 AND 854 OF 1972 AND 378 AND |
| Decision Date |
May 25, 1978 |
| Hearing Date |
|
| Decision |
The court concluded that when a minor admitted to the benefits of a partnership attains majority and chooses to be a partner, there is no change in the constitution of the firm as per the Income Tax Act. However, there is a change in the shares of the partners. The original instrument of partnership must evidence this change to continue registration under Section 184(7) of the Act. The court also emphasized the need for clarity in partnership instruments regarding the distribution of shares, especially in the context of minors attaining majority, to avoid ambiguity in future assessments. |
| Summary |
In this landmark case from the Allahabad High Court, the legal implications of minors in partnerships were critically examined under the Income Tax Act, 1961. The judgment clarified that a minor who has been admitted to the benefits of a partnership, upon reaching majority, does not change the firm’s constitution but does alter the distribution of shares among partners. This ruling plays a crucial role in partnership law, particularly for firms that include minors and addresses the nuances of partnership agreements. The court highlighted the importance of having explicit terms in partnership deeds to clearly outline the rights and responsibilities of partners, especially minors, to avoid disputes during tax assessments. This case serves as a significant reference for legal practitioners and firms navigating similar issues, ensuring compliance with tax regulations while safeguarding the interests of all partners involved. The decision underscores the necessity for precise legal documentation and adherence to statutory provisions governing partnerships, making it a vital precedent for future cases. |
| Court |
Allahabad High Court
|
| Entities Involved |
Not available
|
| Judges |
Satish Chandra, C.J.,
K.C. Agrawal, J.,
R.M. Sahai, J.
|
| Lawyers |
Not available
|
| Petitioners |
Badri Narain Kashi Prasad
|
| Respondents |
Addl. Commissioner of Income Tax
|
| Citations |
1978 SLD 800,
(1978) 115 ITR 858
|
| Other Citations |
[1968] 68 ITR 696 (All),
[1972] 84 ITR 233 (All)
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
184,
185,
30(1),
30(5),
30(7)(b)
|