Law: Income Tax Act, 1961

Section: 185,184(7)

Income-tax-----Firm---Registration---Minor admitted to benefits of partnership becoming major and making endorsement on partnership deed and electing to become partner---Endorsement constitutes fresh partnership for purpose of registration---Indian Income Tax 'Act, 1961, Ss.185 & 184(7)---Indian Partnership Act, 1932, S.30. The assessee-firm had three partners and four minors were admitted to the benefits of partnership. One minor, R, attained majority on March 15, 1961, and on September 10, 1961, made endorsement on the partnership deed showing him to be inducted as a partner. The firm filed an application in Form No. 11, dated June 29, 1962, and sought renewal of registration. The Income-tax Officer refused taking the view that there was a change in the constitution of the firm, but it was not evidenced by any document of partnership. The Tribunal took the view that endorsement by R constituted a fresh partnership and not mentioning 1/4th share of loss of R in Form No. l l was a mistake which could be rectified and directed the Income-tax Officer to allow opportunity to the assessee to rectify the mistake and on such rectification, the firm may be allowed continuation of registration. On a reference: Held, that the firm had come into existence on the date when the minor on attaining majority, elected within six months to be inducted as a partner in the firm. This would be a case of grant of fresh registration under section 185 of the Income Tax Act, 1961, and not continuation of registration under section 184(7) of the Act. The Income-tax Officer was to grant fresh registration to the assessee-firm on rectification of Form No. 11 as directed by the Tribunal. CIT v Durgaprasad Rajaram Adatiya (1984) 146 ITR 580 (MP) and CIT v. Ghanshyam General Stores (1984) 147 ITR 110 (MP) ref. JUDGMENT This is a reference under section 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following questions of law have been referred by the Tribunal for answer of this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the original deed, dated November 14, 1955, together with the…

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