A minor can be admitted to the benefits of a partnership and, upon attaining majority, can elect to become a full-fledged partner and undertake to bear losses relating to the period prior to becoming a major.

( 1 ) THREE identical questions are referred in these references. The assessee is common. The questions referred are :" (1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that there was no legal impediment to a major entering into a contractual relationship with others, respectively, from a point of time when he or she was a minor ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the partnership agreement dated 4/01/1972, did not, in any case, have the effect of making Shashi Rani liable for losses occurring or arising during her minority, though the partnership was stipulated to commence from a point of time when she was a minor ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the partnership was not opposed to any of the provisions of the Excise Act or the rules thereunder and was not violative of any of the conditions of the licence granted under the said Act and was, therefore, not illegal ?"rc No. 285 of 1980 pertains to the assessment year 1972-73, while RC No. 237 of 1980 relates to the assessment year 1973-74.

( 2 ) TWO persons, Bishanlal and Jagatram, constituted a partnership called Three Aces which was running a restaurant and bar at Abid Road, Hyderabad. On 21/11/1971, Jagatram retired from the partnership, with the result that the partnership firm came to an end. Bishanlal took over the business. On 4/01/1972, a deed of partnership was executed between Bishanlal and his four daughters. The fourth and youngest daughter attained majority only on the previous day, i. e. , on 3/01/1972. The partnership deed stated that after Jagatram retired, the business of Three Aces was taken over by Bishanlal along with its assets and liabilities as a going concern and that he has admitted his four daughters into the partnership with them with effect from 22/11/1971. The accounting year followed by the assessee happens to be the financial year. For the assessment year 1972-73, two returns were filed in the name of the partnership firm, Three Aces; one pertained to the period 1/04/1971, to 21/11/1971, with two partners, namely, Bishanlal and Jagatram, and the other return was filed by the new partnership "three Aces" consisting of Bishanlal and his four daughters. Registration under section 184 was applied for for the new partnership. For the next assessment year, i. e. , 1973-74, the new firm submitted its return with an application to continue the registration for that year. The Income-tax Officer granted and renewed the registration to the new firm. Consequently, he made two separate assessments for the assessment year 1972-73 on the basis of the returns filed. However, the Commissioner of Income-tax revised the order of the Income-tax Officer in exercise of his powers under section 263. The Commissioner was of the opinion that what happened during the accounting year relevant to the assessment year 1972-73 is not a case of one partnership succeeding another but that it was merely a case of reconstitution of the firm. He was, therefore, of the opinion that a single assessment ought to have been made for the said assessment year on the firm "three Aces". He was of the further opinion that the new partnership deed executed on 4/01/1972, suffered from a patent illegality inasmuch as the 5th partner, Sashi Rani, was admitted as a partner with effect from 22/11/1971, when she was still a minor (as stated above, she attained majority only on 3/01/1972 ). Moreover, under the partnership deed, Sashi Rani was made liable even for losses, if any, incurred in the business carried on from 22/11/1971, to 3/01/1972, i. e. , during the period when she was a minor. This, the Commissioner held, was contrary to law. He gave yet another reason against granting registration to the new firm, viz. , that the exclusion of the partner, Jagatram, and induct