Law:

Section:

Section 184, of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment years 1971-72 and 1972-73 - Whether continuation of registration cannot be refused simply on ground that minor admitted to benefits of partnership has become partner on attaining majority - Held, yes - Whether, however, continuation of registration will be refused if eventuality of minor becoming a partner on attaining majority was not foreseen in deed of partnership and it does not provide for distribution of profits and losses on minor attaining majority and becoming partner - Held, yes FACTS The assessee-firm consisted of four partners and three minors admitted to the benefits of the partnership. Subsequently, the minors attained majority and elected to become partners. The partnership was refused continuation of registration. However, the Tribunal directed the ITO to allow registration to the assessee. On reference: HELD According to the view that now prevails, continuation of registration cannot be refused simply on the ground that a minor admitted to the benefits of the partnership has become a partner on attaining majority. It will be refused on the ground that the eventuality of the minor becoming a partner on attaining majority was not foreseen in the deed of partnership and it does not provide for the distribution of profits and losses on the minor attaining majority. In the instant case, the continuation of registration had to be refused not simply on the ground that minors admitted to the benefits of the partnership had become full-fledged partners on attaining majority but on the ground that the partnership deed did not provide for such an eventuality and did not specify the shares of the partners in losses after the minors became partners on attaining majority. It was on this basis that the refusal of continuation of registration was upheld in the reference relating to the same firm for the assessment years 1967-68, 1968-69 and 1969-70. The same view must be taken in this reference which related to the assessment years 1971-72 and 1972-73. For the reasons given above, it was held that the Tribunal was not justified in law in directing the ITO to allow…

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