Law:

Section:

, Section 184(8) of the Income-tax Act, 1961 - Firm - Registration - Application for fresh registration on change having taken place - Assessee-firm originally constituted of four limited companies, P, A, G and S - in 1959 share of s was transferred to a - On 20-11-1969 A merged with G - Profit-sharing ratio revised between p and g by letter dated 2-12-1969 - whether assessee-firm entitled to fresh registration - Held, on facts, yes - Whether letter dated 2-12-1969 constituted an "instrument of partnership" - Held, yes FACTS The assessee-firm came into existence by a partnership deed dated 20-6-1954 and at that time it was constituted by four limited companies P, A, G and S as partners. The firm was registered for and from the assessment year 1955-56. By an agreement dated 5-5-1959 the share of S was transferred to A resulting in only three partners remaining in the firm. Subsequently, by virtue of an order of the High Court dated 18-8-1969, A merged with G with effect from 20-11-1969, and from that date only two partners, viz., P and G remained in the firm. There was an exchange of letters on 2-12-1969 as a result of which the revised profit-sharing ratio between the two partners was clearly spelt out. The firm initially did not file an application for registration before the end of the relevant accounting year on 30-6-1970. It was later on advised that the merger of the two partners meant, in effect, a change in the constitution of the firm within the meaning of section 184(8). An application was, therefore, filed on 30-3-1971 along with a letter explaining the delay. The ITO refused registration on two grounds, viz., ( i) that no fresh deed of partnership was executed and there was a multiplicity of documents; and (ii) that the application for registration was filed beyond due date without any valid explanation. On appeal, however, the AAC rejected both the grounds given by the ITO and registered the firm for the assessment year 1971-72. The Tribunal confirmed the AAC's order. On reference the revenue questioned the Tribunal's view that the letter dated 2-12-1969 served as a fresh deed of partnership spelling out the reduction in the number of partners and…

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