A partnership firm consisting of two adult partners is a genuine firm which can be registered under Section 26A of the Income Tax Act, even if one of the partners is a widow who is an heir of the deceased partner and the other partner is the surviving partner.

1. This is a reference under Section 66(1), Income Tax Act to decide the following question: Whether the firm constituted under the partnership deed dated 20-1-1949 was a firm which could be registered under the provisions of Section 26A, Income Tax Act?

2. Two brothers, Mataprasad and Dwarkaprasad, were carrying on business as a Hindu undivided family and were assessed as such for assessment year 1947-48 for the previous year ending Daserah of 1946. On 4-10-1946 there was a partition between these two brothers. On 10-10-1946 they formed a partnership in the wine business carried on in the name and style "Cursetji and Co." and in the cloth business carried on in the name and style 'Seth Brothers'.

By an order under Section 25A of the Act passed on 8-9-1949 the Income Tax Officer recognized the partition of the family properties with effect from 4-10-1946. On 20-6-1948 Mataprasad died leaving behind a widow and three minor sons. On 20-1-1949 Dwarkaprasad and Sethani Saraswatibai, widow of Mataprasad executed a partnership deed.

It was there stated that the firm having been dissolved by the death of Mataprasad on 20-6-1948, the parties agreed to run the business as before with effect from the date of the death of Mataprasad. The shares of the two executants as expressed in the instrument of partnership were equal. The profits and losses were to be shared in the same proportion. It was also agreed that each partner was entitled to carry on business acting for all and had been actually, so acting.

3. On 20-1-1949 an application was made under Section 26A of the Act to claim registration on the basis of the partnership agreement dated 10-10-1946. The application was signed by Dwarka- prasad and Sethani Saraswatibai as heir of Mataprasad. As the Income Tax Officer would r.ot accept registration of the firm on this application, a second application was made by Dwarkaprasad and Saraswatibai, supported by the instrument of partnership dated 20-1-1949, and they pressed for a decision on the second application.

At the hearing it was admitted that Sethani Saraswatibai had entered into partnership with a view to protect the interests of her minor sons. This application was rejected by the Income Tax authorities.

4. The Accountant Member of the Tribunal took the view that it was a partnership between one major partner and three minors represented by their guardian and that the minors cannot be admitted to the benefits of the partnership unless there is a partnership of at least two major partners. The partnership to which the minors are said to have been admitted was dissolved by the death of Mataprasad on 20-6-1948 and consequently the minors could not be admitted to a partnership consisting of only one person Dwarkaprasad.

It was also said that a widow could not be a partner in her individual capacity because she was not an heir but only a karta of the family and that the widow signed the deed as a karta and not as an heir. There is no warrant for these observations. The deed is signed by the lady as a partner of the firm and not as guardian of her minor sons.

The minors do not figure as partners. The question of their admission to the benefits of a single man partnership cannot therefore arise. The lady was an heir of her husband and a karta of the family of herself and her minor sons.

5. According to the Judicial Member, no real firm was brought into existence which could be registered under the Act because. in the terms of the deed Bal Saraswatidevi has joined the partnership 'as a successor and heir to the late Mataprasad in order to run the business as before'.

Reliance was placed on - Raju Chettiar and Brothers v. Commr. of Income Tax Madras, 1951 AIR(Mad) 590. The argument advanced that the widow could be a karta of the Joint family of herself and her three minor sons and as such could enter into the partnership was repelled on the authority of - Radha Ammal v. Commr. of Income Tax, Madras, 1950 AIR(Mad) 538 which did not agree with