A partnership deed that includes minors as full-fledged partners is not invalid and can be registered under Sec. 26-A of the Income-tax Act if the minors are admitted to the benefits of the partnership with the consent of all partners.

1. In this case the assessee is a firm constituted of Sri Kamleshwari Sahai and thirteen other family members. The assessment year is 1950-51 and the corresponding accounting year is the financial year 1949-50. During the assessment year the assessee applied for registration of the "partnership under Sec.26-A of the Income-tax Act. The instrument of partnership is dated 22nd May, 1949, and is annexure A to the statement of the case. The Income-tax Officer refused to register the partnership on the ground that two of the partners, namely, Uma Shankar Sahai and Narendra Shankar Sahai, were minors and the document of partnership was invalid on that account. The assessee took the matter on appeal to the Appellate Assistant Commissioner against tho decision of the Income-tax Officer, but the appeal was dismissed. The Appellate Tribunal also took the view that the minors were shown as full-fledged partners in the partnership deed, sharing both profits and losses, and, therefore, the partnership could not be registered by the Income-tax Authorities under Section 26-A.

2. At the instance of the assessee the Appellate Tribunal has made a statement of the case under Sec. 66 (1) of the Income-tax Act on the following question of law :

"Whether on a true construction of the deed of partnership and under the circumstances of this case, there was any valid "partnership registerable under Sec.26-A of the Indian Income-tax Act?"

3. On behalf of the assessee Mr. Dutta put forward the argument that the Appellate Tribunal has taken an erroneous view of the law and that the partnership constituted by the document dated 22nd May, 1949, should have been registered under Sec.26-A of the Income-tax Act It was submitted that merely because two minors were included in the partnership deed the contract of partnership as between the adult partners could not become invalid, and as a matter of construction it ought to be held that there was a valid partnership between the adult partners and the two minors were admitted to the benefits of that valid partnership. The argument put forward by learned Counsel for the assessee is well founded and must be accepted as correct. Under Sec.30 of the Partnership Act it is open to the partners to admit a minor to the benefits of the partnership. Reference may be made to Sec.30 of the Partnership Act on this point. Sec.30 enacts :

"30.(1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership.

(2) Such minor has a right to such share of the property and of the profits of the firm as may be agreed upon, and he may have access to and inspect and copy any of the accounts of the firm.

(3) Such minors share is liable for the acts of the firm, but the minor is not personally liable for any such act.

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(5) At any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm : Provided that, if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months."

Sec.2 (6-B) of the Income-tax Act is also relevant in this connection. Sec.2 (6-B) states that the expressions firm", "partner" and "partnership" have the same meanings respectively as in the Indian Partnership Act, 1932 (9 of 1932), provided that the expression "partner" includes any person who being a minor has been admitted to the benefits of the partnership. It is also a well-established proposition that the agreements entered into between several persons, some of whom are by law incompetent to contract, are not wholly null and void, but are only less effective than if all the