Law:

Section:

Section 184(7), read with section 184(2), of the income-tax act, 1961-Firm-Registration-Continuation of-Whether on minor admitted to benefits of partnership becoming major and continuing to be partner, continuation of registration could be granted on the basis of original partnership deed if that deed provided for share of loss in case minor did not opt out after attaining majority-held, yes Facts The assessee-registered firm consisted of three partners and one minor, admitted to its benefits. The minor attained majority on 1-7-1966 and did not opt out of the firm yet no fresh deed of partnership had been executed by the partners. The Additional Commissioner held that there was a change in the constitution of the firm necessitating the drawing up of a fresh partnership deed, and this not having been done, held that the assessee was not entitled to continuation of registration for the assessment year 1968-69. This view was confirmed by the Tribunal. On reference: Held It is well established that there can be no 'change in constitution' by the mere fact of a minor admitted to firm's benefits, becoming a major and electing to remain a partner. Since a minor is not liable to share in the firm's losses, the distribution of the shares in losses, on the minor attaining majority must be ascertainable from the original partnership instrument and if it is ascertainable, the firm will be entitled to the continuation of registration. In the instant case such an ascertainment was possible since the partnership deed clearly indicated that the share of the losses of each partner including that of the minor if he chose to continue as a partner after attaining majority, was to the extent of 25 per cent. The assessee-firm was, therefore, entitled to continuation of registration. Case review Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858 (All.) (FB) relied upon. Cases referred to Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696 (All) and Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858 (All.). IT REFERENCE NO. 448 OF 1975. Judgment SETH, J.- At the instance of the assessee, Vaish Pharmacy, Farukhabad, this Court vide its order dated 3-9-1974, called upon the…

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