COMMISSIONER OF INCOME-TAX vs. KRIKSHNA UNDERCASING MFG.,

ITR/35/1987HC GujaratGJHC24011768198727 August 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryAllowed

What did the High Court hold?

The Tribunal held that this was not a case of a minor directly becoming a partner. Instead, it involved a trustee of a trust, where the sole beneficiary was a minor, entering into a partnership. The Tribunal found that the trustee, being competent to contract, could enter into a partnership. The registration could not be refused solely on the ground that the beneficiary was a minor. The Tribunal reasoned that if the author of the trust directed the trustee to enter into a partnership, it was the trustee's duty to obey. This was supported by Section 11 of the Indian Trusts Act, 1882, which mandates a trustee to fulfill the trust's purpose and obey the author's directions, unless all competent beneficiaries consent otherwise. The High Court agreed with the Tribunal's view, proceeding on the footing that the author of the trust had directed the trustee to enter into partnership, and the trustee was merely complying. Therefore, no error was found in the Tribunal's decision.

What were the facts?

The assessee, a partnership firm, sought registration for the assessment year 1979-80. The Income Tax Officer refused registration because one of the new partners inducted through a deed dated 11.1.1978 was Shri B.R. Bhavsar, the trustee of Jitendra Benefit Trust. The Income Tax Officer's reasoning was that Jitendra, the sole beneficiary of the trust, was a minor, and under the Indian Partnership Act, a minor cannot be a partner. The Appellate Assistant Commissioner (AAC) allowed the appeal, holding that registration should be granted. The Income Tax Appellate Tribunal confirmed the AAC's view. The Revenue has filed a reference to the High Court on this issue.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the view taken by the AAC that the assessee is entitled to registration and the same cannot be refused on the ground that the sole beneficiary of the trust was a minor? Assessee's contentions: Not recorded as none appeared for the respondent. Revenue's contentions: The Revenue argued that since the Indian Partnership Act, 1930, does not permit a minor to enter into a partnership agreement, a firm with a minor partner cannot be granted registration under the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 35 of 1987

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO ----------------

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →