Law:

Section:

Section 184(7) of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment year 1962-63 - Assessee-firm consisting of two partners 'N' and 'P' was registered under Indian Income-tax Act, 1922 - Renewal of registration was granted to assessee-firm upto assessment year 1961-62 - Subsequently, there was partial partition in family of 'N' as per which 13/18thshare of 'N' in assessee-firm was converted into partnership business of 'N' and his three sons by another partnership deed dated 2-5-1960 - Thereupon, assessee's application for renewal of registration was rejected mainly on ground that firm constituted under partnership deed dated 2-5-1960 was real partner of assessee-firm and that there could not be a valid partnership between an individual and firm - Whether whatever be relationship between 'N' and his sons as per deed of partial partition or as per partnership deed dated 2-5-1960, since, earlier partnership deed had not been modified and relationship between two partners referred to therein continued to be same, renewal of registration in such circumstances could not be refused to assessee-firm - Held, yes FACTS The assessee-firm, consisting of two partners, 'N' and 'P', was registered under the Indian Income-tax Act, 1922, and the registration was renewed upto assessment year 1961-62. Subsequently, there was a partial partition in the family of 'N'. As per the said partition, the 13/18th share of 'N' in the assessee-firm was converted into a partnership business of 'N' and his three sons by a partnership deed dated 2-5-1960. There was, however, no change effected in the terms of original partnership deed by admitting the divided members of 'N's family as partners in the assessee-firm nor was there any separate deed bringing in N's sons as partners of the assessee-firm. The partnership deed, 2-5-1960, however, provided that the 13/18th share held by the family in the assessee-firm should be divided equally between 'N' and his sons as also the share of profits therefrom. The assessee-firm's application for renewal of registration for the assessment year 1962-63 under section 184(7) was rejected by the ITO on the grounds that (1) no fresh…

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