controversy in present appeal is whether firm in question ought to have been allowed registration. facts giving rise to controversy may be noted. assessee-firm was constituted by partnership deed dt. 23rd Feb., 1978. According to this deed, following three persons were its partners; (i) Sri Jogendranath Deka (ii) Sri Dhiren Deka (iii) Shri Jiten Deka preamble of deed further provided that Shri Khanin Deka, son of Shri J. N. Deka, who was minor would be admitted to benefits of partnership. relevant part of preamble reads as follows: "Be it noted that Sri Khanin Deka, son of Sri J. N. Deka, resident of Doom Dooma, P. O. Doom Dooma, P. S. Doom Dooma, Sub-Registration Office at Tinsukia, Tinsukia Sub-Division, in District of Dibrugarh Assam, minor son has been admitted to benefit of partnerships with such share of profits as has been provided in this instrument with all rights and liabilities as per s. 30 of Indian Partnership Act, 1932, to which father and natural guardian Sri Jogendra Nath Deka has given his full consent." share of profits referred to above, which was provided to minor, was as per cl. (v) of deed. said clause read as follows; "That profits and losses of partnership business shall be divided and borne by parties in equal proportions after adjustment of all expenses of partnership business incidental to business only together with any liabilities of Income-tax of partnership firm. Income-tax liabilities of parties shall have to be borne by parties themselves." assessee filed registration application in Form No. 11 alongwith aforesaid deed. In said application assessee made, inter alia, following remark "minor Shri Khanin Deka, admitted to benefits of partnership sharing 25% in profit only as per s. 30 of Indian Partnership Act. In column-7 of said form, it was declared on behalf of firm that three partners would share losses @ 33 1/2% each. ITO expressed to opinion on basis of aforesaid facts that aforesaid partnership was not eligible for registration because cl. (5) referred to above would mean that minor was also to share losses which went, according to him, against principles of s. 30 of Indian Partnership Act. He, therefore, rejected registration to firm, making, inter alia, following observations: "As per cl. (5), as pointed out above, minor has been made liable to share losses which is contrary to provisions of Partnership Act. When this was pointed out to assessee, it was argued that since at p. 2 of partnership deed it has been specifically mentioned that minor has been admitted to benefit of partnership with such shares of profit as has been provided in this instrument with all rights and liabilities as per s. 30 of Indian Partnership Act, it cannot be said that minor has been made liable to losses also. I do not agree. partnership deed must specify share of each partner in profits and losses of firm. In partnership deed under consideration only cl. (5), as pointed out above, specifies share of partners. Here it has been clearly said that profits and losses shall be divided and borne by parties in equal proportions. That means, minor is also liable to bear loss. If word parties in cl. (5) of partnership deed refers to parties to contract only, then nowhere else in partnership deed share of minor has been specified. partnership deed is, therefore, invalid in eye of law and partnership firm cannot be granted registration under IT Act, 1961. I, therefore, refuse to grant registration to firm." (Emphasis italicized, in print, supplied) assessee carried matter in appeal to ld. AAC who, however, held that if partnership deed was read as whole, ".............it would be clear that loss to be shared by minor would be related to his share in partnership and that he was not personally liable for such loss. Examined for this angle cl. (5) on which reliance had been placed by ITO cannot reasonably by interpreted in manner repugnant to validity or genuineness of firm 2. After having said as above, ld. AAC proceeded to make following observations; "The sad clause, (i.e. cl. (5) read with portion of preamble extracted above could only mean that losses to partnership business shall be divided and borne by parties competent to bear such losses. I find myself in agreement with A/R when he states that information contained in application for registration carries sufficient relevance for purpose of determining genuineness of partnership firm and same should not be ignored. In support of his stand as above, ld. AAC relied, inter alia, on following decisions; (1) Krisna & Bors. vs. CIT (1968) 69 ITR 135 (2) Abdul Aziz & Co. vs. CIT (1975) 98 ITR 299 (J&K) (3) CIT Mysore vs. Shah Mohandas Sadhuram (1965) 57 ITR 415 (SC) (4) CIT vs. Shal Jeihaji Phulchand (1965) 37 ITR 338 (SC) (5) CIT vs. Krishna Mining Co. (1980) 15 CTR (AP) 203: (1980) 122 ITR 362 (AP) Department is in appeal against aforesaid order of ld. AAC and it s plea of ld. Departmental Representative before us that aforesaid partnership deed properly read would clearly indicate that minor was made liable to share losses equally with other major partners. Alternatively if it was presumed that minor would not be liable to losses on account of operation of s. 30 of Indian Partnership Act, losses of other partners in firm would remain indeterminate, and, for this reason also firm would not be eligible for registration. In support of above proposition, ld. Departmental Representative relied on decision of Hon ble Supreme Court in case of Mandyala Govindu & Co. vs. CIT, A. P. 1976 CTR (SC) 20: (1976) 102 ITR 1 (SC). Reference was also made to decision of Hon ble Supreme Court in case of N. V. Patel & Co. vs. CIT Madras (1961) 42 ITR 224 (SC). On behalf of assessee reliance was placed on decision of ld. AAC. In addition to that, our attention was drawn to following decisions: (i) CIT, A. P. vs. Hydrabad Stone Depot & Ors. (1977) 109 ITR 686 (AP) (FB) (ii) CIT, A. P. vs. Krishna Mining Co. (supra) (iii) CIT vs. East India Lamp & Components (1981) 21 CTR (Cal) 278: (1981) 129 ITR 426 (Cal) It was also stressed by ld. counsel for assessee that Form No. 11 wherein declaration had been made that minor will not have share in losses and that major partners would share profits in equal proportions ought to be read as part of partnership deed and thus read, no debate was possible with regard to sharing of losses amongst partners. In rejoinder, ld. Departmental Representative pointed out that Form No. 11 could not be regarded as part of partnership deed. He relied for above proposition on decision of Hon ble Supreme Court in case of Agarwal & Co. vs. CIT, U. P. (1970) 77 ITR 10 (SC). We have given careful consideration to rival submissions. In case o f CIT, Mysore vs. Shah Mohandas Sadhuram (1965) 57 ITR 415 (SC) their Lordships have emphasised that partnership deed must be construed reasonably. In that case, minors were admitted to benefits of partnership and it was made clear that they were not liable for liabilities under partnership deed. guardians of minors, however, agreed that capital will be contributed by minors. Clause (8) of partnership deed stipulated, inter alia as follows; ".............after debiting all working expenses............................the profits of firm less six pies per every rupee of profits which will be reserved for charity fund will be distributed pro rata according to proportion of capital investment s detailed of each member, all to be paid to his account in books of s detailed of each member, all to be paid to his account in books of account, from where each member can drawn. losses are agreed to be shared by members in like manner. In accordance with above agreement, account of minor was actually debited with his share of losses. In view of this debiting of account of minor by loss allocated to him by firm in accordance with cl. (8) referred to above, ITO felt that partnership in question was invalid as it violated provisions of sub-s. 2 of s. 30 of Indian Partnership Act. On these facts their Lordships pointed out that recital in preamble of partnership deed expressly stated that "It is major members who had decided to constitute partnership and to admit minors to benefits of said partnership. "The recital of clauses", according to their Lordship "must be construed in light of this recital." Their Lordships again stated little later that "in our opinion, partnership deed reasonably construed only conferred benefits of partnership on two minors and did not make them full partners." Accordingly refusal of registration by IT authorities on ground that minors had been made full fledged partners was held by their Lordships on above facts, erroneous. Reading present partnership deed in light of aforesaid guidelines, it has to be held that in present partnership also minor has been admitted to benefits of partnership and it has further been clarified that his liabilities under partnership deed would be "as per s. 30 of Indian Partnership Act, 1922." Sub-s. 3 of s. 30 of Indian partnership Act clarifies that "minor s share is liable for acts of firm, but minor is not personally liable for any such act." In view of this provision, minor s account can be debited with losses allocated to him by firm as per agreement of partnership admitting to benefits of partnership. But debit to his account on account of losses would not be more than his share in firm and, in any case, for losses debited to his account, he would not be personally liable. Clause (5) of partnership deed specifically mentions that profits and losses of partnership business shall be divided and borne by parties in equal proportion. Apparently, as per aforesaid provisions, each of major partner, as also minor would be entitled to 1/4th share in profits of firm. Each one of them would similarly be liable to losses of firm to extent of 1/4th. losses debited to minor s account would, of course, only be to extent of his share in firm. minor would not be personally liable for losses of firm. aforesaid provision in cl. (5) is in tune with provisions of Indian Partnership Act, as enshrined in sub-s. (3) of s. 30 of said Act, as extracted by us above. There may be no problem in allocating profits and losses to partners and minor so long as there are profits. There would again be no problem is so far as losses to be debited to account of minor are less than or equal to share of minor in firm. If said share absorbs are loss debited to him, aforesaid debit would be in accordance with sub-s. 3 of s. 30, but when loss in question, debitable to minor on basis that 25% of losses to be debited to him, exceeds share of minor in books of firm, question would arise as to how to allocate remainder loss between existing partners. minor admittedly could not be personally saddled with unadjusted loss in view of provisions of s. 30 of Partnership Act which have been made specifically applicable in present case vide preamble of partnership deed quoted above. There is no provision in partnership deed dealing with this eventuality in so many words. most favourable interpretation to assessee, on workings of cl. (5), would be that such unadjusted loss would also be debitable to major partners equally over and above their respective losses already debited to their accounts. Thus interpreted, it is possible to say, and we say so, that deed specifies shares of partners in losses also. But difficulty in present case is that assessee has declared in Form No. 11 that share of partners in losses was 33 1/2% each and that minor had no share in losses. above position does not emerge from partnership deed as interpreted by us above. Clause (5) of deed makes minor share losses also equally with other partners, subject to safeguards of s. 30 of Indian Partnership Act, as stated specifically in preamble. declaration in Form No. 11, in circumstances, appear to us to be in contradiction to provisions in partnership deed, which is sought to be registered. application for registration is, thus not reflective of shares be registered. application for registration is, thus not reflective of shares of partners and of minor in losses of firm, as contained in partnership deed. This being so, we feel it was not possible for ITO to grant registration to assessee firm on basis of above declaration and he was right in rejecting registration to firm. various authorities relied on by assessee, do not, in our opinion, help to advance its case. In case of CIT, A. P. vs. Krishna Mining Co. (supra), it was made clear in partnership deed that minor would have no share in loss, and that losses would be shared by major partners. As noted earlier, this is not position in present case. Here, minor has been made to share losses also in accordance with provisions of s. 30 of Indian partnership Act. It is, therefore, no open to interpret present partnership deed in manner in which partnership deed of M/s Krishna Mining Co. was interpreted by their Lordships of Andhra Pradesh High Court. Similar is position with regard to case of CIT, A. P. vs. Hyderabad Stone Depot & Others (supra). In that case also, it was not one of conditions of partnership deed that minors share in losses would be governed by provisions of s. 30 of partnership Act. There it was stated, on one hand, that minor had been admitted to benefits of partnership and, yet on other hand, clause dealing with sharing of profits and losses stated that "all profits and losses will be divided in ratios as stated in deed." minor had 7% share in profits. Their Lordships held, on above facts, that minor had no share in losses at all as he had been admitted to benefits of partnership only and that most reasonable way to interpret above provisions in partnership deed would be to hold that loses were to be shared by major partners taking 93 paise as unit of total lose. It is not possible to hold so in present case, for reasons indicated above. Here, minor has been made to share losses to extent of his share in firm in terms of s. 30 of Indian partnership Act. Thus, to sum up, we find nothing in present partnership deed, which militates against provisions of Indian Partnership Act. minor can be made to share losses of firm to extent of his share in firm as per provisions of sub-s. (3) of s.30 of Indian Partnership Act, 1932. We have interpreted cl. (5) of partnership deed to mean that, if any loss allocable to minor remains unadjusted by credit balance in his account, such loss will be reallocated amongst major partners equally. There is nothing in law to bar this position. Partnership deed is thus valid in eye of partnership Act, and, in our opinion it specifies share of partners in losses. Despite it, we are unable to accept assessee s claim for registration in present case because declaration made by assessee in application for registration in Form No. 11 with regard to sharing of losses amongst various partners and minor is not in accordance with partnership deed. In view of what we have stated above, we reverse order of ld. AAC and confirm that of ITO. In result, Departmental appeal succeeds. *** INCOME TAX OFFICER v. J.D. ENTERPRISES