| Case ID |
42b833c7-ace3-410f-a56e-bcf8bfb0490e |
| Body |
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| Case Number |
R.C. No. 164 OF 1979 |
| Decision Date |
Nov 06, 1984 |
| Hearing Date |
|
| Decision |
The Supreme Court held that the assessee-firm was entitled to registration under section 185 of the Income-tax Act, 1961. The Court confirmed that profits or losses for purposes of sharing by partners accrue only on the date on which the partnership firm closed accounts. It ruled that the minor partner's competency to take upon himself obligations and responsibilities associated with the business was valid and that there was no legal issue with the partnership deed executed after he attained majority. The Tribunal's rejection of the firm's registration was deemed erroneous. |
| Summary |
This case revolves around the interpretation of partnership laws and the registration of a firm under the Income-tax Act, 1961. The Supreme Court addressed the eligibility of a partnership deed executed after a minor attained majority, specifically focusing on the sharing of profits and losses. The ruling emphasized that partners' rights to profits or obligations towards losses arise only when the accounts are officially closed. This decision clarifies the legal standing of partnership agreements involving minors transitioning to adult partners and establishes a precedent for future cases concerning firm registration and profit-sharing. The case highlights the importance of understanding partnership laws, particularly sections 185 and 5 of the Income-tax Act, 1961, which govern registration and general provisions regarding partnerships. It serves as a key reference for legal practitioners and entities involved in partnership agreements, ensuring compliance with taxation laws and protecting partners' rights. |
| Court |
Supreme Court
|
| Entities Involved |
Not available
|
| Judges |
A. Raghuvira,
Y.V. Anjaneyulu
|
| Lawyers |
S. Dasaratharama Reddy,
S.R. Ashok,
M. Suryanarayana Murthy,
A.V. Krishna Koundinya
|
| Petitioners |
Not available
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1986 SLD 1225,
(1986) 157 ITR 589
|
| Other Citations |
CIT v. Ashokabhai Chimanbhai [1965] 56 ITR 42 (SC),
Vinodkumar Ratilal v. CIT [1975] 100 ITR 564 (Guj.),
Arvind Bhogilal v. CIT[1976] 105 ITR 764 (Bom.),
CIT v. R. Dwarkadas & Co. [1971] 80 ITR 283 (Bom.),
CIT v. P.M. Syed Mohammed Kannu & Co.[1984] 149 ITR 441 (Ker.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
185,
5
|