Law:

Section:

Section 184 of the Income-tax Act, 1961, read with section 30 of the Indian Partnership Act, 1932 – Firm – Position prior to 1-4-1993 – Assessment year 1969-70 – Whether a minor admitted to benefits of partnership continue to enjoy same status till expiry of six months from date when he attains majority and during this period no change in constitution of firm is brought about - Held, yes – Minor admitted to benefit of assessee firm became major on 14-3-1969 – Fresh partnership deed was executed on 12-6-1969 and, thereafter, application for registration of firm was filed – ITO rejected said application on ground that fresh partnership should have been executed before 31-3-1969 – Whether since up to 31-3-1969, period of six months gave to minor to make his option about joining of firm had not expired, it was not incumbent on assessee-firm to either draw up fresh partnership deed or to give any intimation in respect thereof to ITO within this period – Held, yes – Whether since fresh partnership deed was entered into before, expiry of aforesaid period of six months, application filed by assessee firm did not suffer from any deficiency and therefore, it was entitled to benefit of continuation of registration – Held, yes FACTS Two minors had been admitted to the benefit of partnership. The benefit of registration was continued upto the assessment year 1968-69. One of the minor partners became major on 14-3-1969. For the assessment year 1969-70, a fresh application in Form No. XI-A was filed by the assessee-firm along with a new deed of partnership executed on 12-6-1969. The ITO rejected the application for registration as, in his opinion, the fresh partnership deed should have been executed before 31-3-1969, and since it was executed on 12-6-1969, the firm was not entitled to registration. The AAC held that since the old deed of partnership was in force up to six months of the minor attaining majority, therefore, the assessee-firm was not required to execute a fresh deed of partnership before 31-3-1969. He held that the old deed continued to have legal force for six months. Accordingly, the AAC allowed the appeal and directed the ITO to treat the assessee-firm as a…

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