Law: Income Tax Act, 1961

Section: 187(2)(a),182,183,184

Law: Partnership Act, 1932

Section: 13(b)

Law: Contract Act, 1872

Section: 253(2)

Law: Income Tax Act, 1922

Section: 26A,2(23)

Section 184, read with section 187 of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1973 - Assessment years 1963-64 and 1964-65 - Originally assessee firm consisted of four partners and three minors were admitted to benefits of partnership - Firm was granted registration - Subsequently, one of minors attained majority and thereafter proportion of losses could not be ascertained from instrument of partnership deed - Whether there was change in shares of losses and, therefore, on basis of original partnership deed assessee was not entitled to renewal of registration - Held, yes FACTS Originally the assessee-firm consisted of four partners and three minors admitted to the benefits of the partnership. Registration was granted to the firm under section 26A of the 1922 Act, for the assessment year 1959-60 and the same was renewed from year to year up to the assessment year 1961-62. The ITO while scrutinishing the accounts for the assessment year 1962-63 found that the loss was apportioned among the partnership in a manner different from what was contemplated in the deed of partnership. The explanation furnished by the assessee was that one of the minors had attained majority during the relevant assessment year. The ITO, however, was of the view that after the minor attained majority, a fresh deed of partnership should have been executed and, as this had not been done, the firm was not entitled to the renewal of the registration for the assessment year 1962-63. The AAC allowed the assessee's appeal as in his opinion there was no change in the constitution of the firm. The appeal filed by the revenue was dismissed by the Tribunal and the order passed by the Tribunal for the assessment year 1962-63 became final. For the assessment years in question, the ITO refused the renewal of the registration precisely on the same ground. The AAC once again reversed the order passed by the ITO against which the department filed an appeal but with no success. On reference: HELD The benefits of continuance of registration in the years subsequent to the year of original registration is dependent upon two conditions - first, the assessee files a declaration in Form No. 12…

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