SABYASACHI MUKHERJI, R. N. PYNE

( 1 ) THIS reference under Section 256 (1) of the Income-tax Act, 1961, relates to the assessment year 1962-63 and here we are concerned with the question of interpretation of the deed of partnership dated November 9, 1959. For better appreciation of the question involved in this reference it is, therefore, necessary to set out some of the relevant facts and the same may, briefly, be stated.

( 2 ) THE assessee-firm originally consisted of seven parties. Sri Hariprasad Ghanshyamdas, Narayana Prasad, Shivnarayan and Soorajrnal, sons of Ram Sahay (deed.), Mannalal, Madanlal, son of Shivnarayan and Mohanlal, minor son of Mannalal. Such firm was constituted under the deed of partnership dated May 17, 1957. Madanlal died on October 5, 1959, and another deed of partnership was executed on November 9, 1959, which took effect from October 6, 1959. Thus, for the assessment year 1960-61 there were two periods : the first period was from November 11, 1958, to October 5, 1959, and the other was from October 6, 1959, to October 31, 1959. For the first period the assessee-firm applied for renewal of registration and so also for the second period. The Income-tax Officer rejected both the applications for the reason that in respect of the first period, Mohanlal, minor, had been described as a full partner and the loss of the business had been actually allocated to his share as well. For the second period also he gave the same reasons. We arc, however, not concerned with the assessment year 1960-61 in this reference. For the assessment year 1962-63, with which we are concerned in this reference, the Income-tax Officer refused registration on two grounds : firstly, that no application for registration had been filed and, secondly, that the minors had been shown as full-fledged partners.

( 3 ) THE assessee-firm filed three appeals against these three orders before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner disposed of those appeals by separate orders and he agreed with the Income-tax Officer. For the assessment year 1962-63 he, however, held that it was not correct to say that no application for registration had been given. He found that the assesscc-firm had given an application on June 30, 1962, but it was delayed by about 8 months and as there was no sufficient cause shown to explain the delay, the registration could not be granted on that ground as well.

( 4 ) BEING aggrieved by the said order of the Appellate Assistant Commissioner the assessee-firm preferred three appeals before the Tribunal and they were disposed by the Tribunal by a consolidated order dated August 22, 1970. So far as the assessment year 1962-63, with which we are conceined in this reference, the Tribunal, after discussing the contentions of the assessee and the revenue made before it and also considering the cases cited before it, held that registration of the assessee's partnership was rightly refused for the said year. The Tribunal held that:"in our opinion, on a reasonable construction of the document, it is not possible to hold that Mohanlal was admitted to the benefits of partnership with the consent of all the adult partners. With regard to Mohanlal the position to all intents and purposes remains the same as was under the previous partnership deed. Therefore, for the second part of the assessment year 1960-61 and the assessment year 1962-63 registration on the basis of this partnership deed could not have been legally granted and has been rightly refused. "

( 5 ) IN the aforesaid circumstances and on the application of the assessee, the following question of law has been referred by the Tribunal to this court:"whether, on the facts and in the circumstances of the case, the Tribunal, while considering the provisions of the partnership deed dated November 9, 1959, was correct in holding that Mohanlal was not admitted to the benefits of the partnership with the consent of all the adult members and that

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