Comment on the following with reference to ratio in leading cases, if any: An HUF can become a partner in a firm.
CS Professional · Drafting, Appearances and Pleadings · PYQS · December 2016
Comment on the following with reference to ratio in leading cases, if any: An HUF can become a partner in a firm.
Answer & Explanation:
The word "person" in Section 4 of the Indian Partnership Act, 1932 contemplated only natural and legal persons. (Duli Chand v. C.I.T., AIR, 1956 SC 354). Partnership relation is one of contractual nature. Therefore, such persons who are competent to contract can enter into partnership. Therefore, a HUF is not a person as defined in Section 4 of the Indian Partnership Act, 1932 and cannot enter into partnership with any person. However, Karta on behalf of HUF can become partner in the partnership firm. But, when the Karta of a HUF enters into partnership with strangers, the other members of the HUF do not ipso facto become partners. (Firm Bhagat Ram vs. Comm. of Excess Profits Tax, AIR 1956 SC 374)
Topics: Indian Partnership Act, 1932
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