TMI Blog1988 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership would be divided among the three partners in equal shares. The said partnership was duly registered under section 184 of the Income-tax Act, 1961, and continued to be so registered till the assessment year involved, namely, assessment year 1975-76, the accounting year ending on November 11, 1974. The said minor, Rajendra Prasad Jaiswal, attained majority on August 11, 1974. On November 20, 1974, a fresh deed of partnership was executed by and amongst the said Jag Narain Prasad, Kamla Devi Jaiswal and Rajendra Prasad Jaiswal, where it was, inter alia, recorded that the said Rajendra Prasad had exercised his option to become a partner in the assessee firm with effect from August 11, 1974, and that the said partnership business commenced with effect from August 11, 1974. The shares of the three partners in the profits and losses of the assessee continued to be one-third each. On June 30, 1975, a declaration in an obsolete Form No. 12, which had since been revised, was filed on behalf of the assessee under section 184 of the said Act. The Income-tax Officer took the view that as the minor who had been admitted to the benefits of partnership had attained majority duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Income-tax Act and the rules framed thereunder, when a minor admitted to the benefit of a partnership attained majority during a particular previous year and became a partner, a fresh deed of partnership was required to be executed during the previous year and an application for fresh registration in Form No. 11A had to be filed within the prescribed time, as there had been change in the constitution of the firm. Neither of the aforesaid was done by the assessee. Following the decision of the Allahabad High Court in Ram Narain Laxman Prasad v. ITO [1972] 84 ITR 233, the Income-tax Officer held that in the instant case, there was a change in the constitution of the assessee, during the relevant previous year, and that it was not entitled to the continued benefit of the original registration on the basis of the original partnership deed. On the grounds as aforesaid, the Income-tax Officer refused registration to the assessee for the said assessment year 1975-76 and held that the assessee should be treated as having the status of an unregistered firm. The assessee filed an appeal from the order of the Income-tax Officer to the Appellate Assistant Commissioner. It was conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that there was no change in the constitution of the assessee and, as such, the continuation of registration of the assessee should have been allowed for the said assessment year. Though the first declaration had not been signed by Rajendra Prasad Jaiswal, the declaration filed subsequently had been signed by him. It was contended that the assessee was a genuine firm and the registration granted to it in the earlier years should have been continued for this year also. It was contended on behalf of the Revenue before the Tribunal that there was a change in the constitution of the assessee as after August 11, 1974, there was a change in the ratio of sharing in the loss between the partners and as such a fresh deed recording the same should have been filed with a fresh application for registration in Form No. 11A within the prescribed time. The declaration filed subsequently was not proper as the same had been signed by only one partner, namely, Jag Narain Prasad, and there was no evidence that Jag Narain Prasad had any authority to sign the same on behalf of Kamla Devi Jaiswal. The decision of the Allahabad High Court in Ram Narain Laxman Prasad's case [1972] 84 ITR 233, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be, by a person entitled under law to represent him. (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought : Provided that the Income-tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year... (6) The application shall be made in the prescribed form and shall contain the prescribed particulars. (7) Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year : Provided that (i) there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted ; and (ii) the firm furnishes, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership as in existence from time to time during the previous year up to the date of the application together with copies thereof. A certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument or instruments cannot be produced. " Rule 24 : " 24. Declaration for continuation of registration. -The declaration to be furnished under sub-section (7) of section 184 shall be in Form No. 12 and shall be verified in the manner indicated therein and shall be signed by the persons concerned in accordance with sub-rule (5) of rule 22." Learned advocate for the assessee submitted that the Tribunal erred in holding that on the facts of the instant case, there was a change in the constitution of the assessee in view of the change in the ratio of sharing loss between the partners, that a fresh deed should have been executed recording the same and that the assessee should have applied afresh for registration in Form No. 11 A. It was submitted that the decision of the Allahabad High Court in Ram Narain Laxman Prasad's case [1972] 84 ITR 233 was no longer good law inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which would occur when the minor partner would become a major. In such a case, there was no need to require the partners to execute a fresh document merely to ascertain their shares after the minor had become major. Ganesh Rice Mills v. CIT [1981] 132 ITR 257 (MP). In this case, the Division Bench of the Madhya Pradesh High Court, following the Full Bench decision of the Allahabad High Court in Badri Narain Kashi Prasad [1978] 115 ITR 858, held that when a minor admitted to the benefits of a partnership attained majority and became a partner in the real sense and it could be construed from the deed of partnership the distribution of loss amongst the partners, including the minor who had attained majority, it could not be said that in such a case there occurred any change in the shares of the partners which was not evidenced by the instrument of partnership or that there was any change in the constitution of the firm. Durgaprasad Rajaram Adatiya v. CIT [1982] 134 ITR 601 (MP). In this case, another Division Bench of the Madhya Pradesh High Court following its earlier decision in Ganesh Rice Mills' case [1981] 132 ITR 257, held that inasmuch as under section 2(23) of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to sub-section (7) of section 184 within the prescribed time. The assessee filed the declaration in an obsolete Form No. 12 on June 30, 1975. The Income-tax Officer was justified in not accepting the said declaration filed in an obsolete form. The subsequent declaration in the revised Form No. 12 was filed by the assessee long after June 30, 1975, the prescribed date, on January 6, 1976. Even then the form was not filed properly as one of the partners, Kamla Devi Jaiswal, had not signed the same and as such the Income-tax Officer was justified in not accepting the said declaration. No evidence was furnished by the assessee as to why the said Kamla Devi Jaiswal was prevented from signing the said form nor any authority from the said Kamla Devi Jaiswal in favour of the said partner, Jag Narain Prasad, empowering the latter to sign the declaration on behalf of Kamla Devi Jaiswal was produced. The Income-tax Officer was, therefore, justified also in rejecting this declaration filed subsequently and refusing registration to the assessee. In support of his contention, learned advocate for the Revenue cited CIT v. Jugsalai Electric Supply Co. [1987] 165 ITR 740 (Pat). In this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said section and such definition and meaning cannot be imported in construing the expression "change in the constitution of a partnership" under section 184. During the relevant assessment year, the minor, Rajendra Prasad, who had been admitted to the benefits of the partnership, attained majority. A copy of the original deed of partnership dated November 17, 1969, has been brought on record before us. The same must have been in the records of the earlier proceedings. The said deed clearly provides for the shares of profits and losses of the said Rajendra Prasad both during the period of his minority and after he attained majority. It cannot be held that there was any change in the constitution of the assessee by reason of the minor attaining majority as such nor can it be said that there was any change in the shares of the partners of the assessee which was evidenced from the said deed. We note further that the assessee filed its original declaration under section 184(7) of the said Act of 1961, before the Income-tax Officer on June 30, 1975, within the time prescribed for furnishing such declaration. It has been found that the said declaration had been filed in an obsolete f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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