The main legal point established in the judgment is the requirement for strict compliance with the provisions of the Income Tax Act, particularly the necessity of specifying individual shares of partners in both profits and losses for registration of a firm under section 184.

Gopalan Nambiyar, C.J.

1. M/s Best Automobiles, the assessee in this case, was originally a firm constituted of two partners under a deed of partnership, dated 10th May 1968. A change in the constitution of the firm took place by the admission of two minor partners to the partnership. This led to the execution of a new deed of partnership on 1st April 1972. The assessment year with which we are concerned is 1973-74, that is, after the execution of the new deed of partnership. The relevant clause in the deed of partnership is clause 7 which reads:

"The minors as well as the partners shall be entitled to 1/4th share of the net profit or loss of the partnership; provided that the liability of the minors shall be limited, as contemplated in section 30 of the Partnership Act, 1932. The share of profit due to the minors shall not be withdrawn till they attain majority and they will bear interest at 12 per cent per annum,"

Clause 12 of the deed provided:

"In respect of matters not specifically provided in this agreement, provisions of the partnership Act shall prevail."

The firm applied for registration under section 184 of the Income Tax Act, 1961. The Income Tax Officer refused registration following the decision of this Court in C. T. Palu and sons v. C. I. T., Kerala (72 I.T.R. 641). He took the view that there was an omission to specify the share in the losses of the firm. On appeal, the Appellate Assistant Commis?ioner held that it was clear that the shares of the partners including the minors were specified by clause 7 of the deed in proportion to the profits and the losses of the firm. He allowed the appeal and directed registration be granted to the firm. The said decision was confirmed on further appeal by the Income Tax Appellate Tribunal. At the instance of the Revenue, the Tribunal referred the following question of law for the opinion of this Court, under section 256 (1) of the Act:

"Whether the assessee firm is for assessment year 1973-74 entitled to registration on the basis of the partnership deed annexed, marked Annexure 'A', under the Income Tax Act, 1961?"

2. Section 184 of the Income Tax Act, in so far as it is relevant, reads:

"184. Application for Registration." (1) An application for regis?ration of a firm for the purposes of this Act may be made to the Income Tax Officer on behalf of any firm if

(i) the partnership is evidenced by an instrument; and

(ii) individual shares of the partners are specified in that instrument.

(2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution.

x x x"

The conditions necessary for obtaining registration of the firm as posited by section 184 (1) of the Act are: (1) that the partnership must be evidenced by an instrument and (2) that the individual shares of the partners must be specified in that instrument. The question for consideration would be whether these tests stand satisfied in the instant case. It has been ruled that as registration of the firm confers certain benefits on the firm in question, strict compliance with the provisions of the Act requiring regis?ration is necessary. In Sri Ramamohan Motor Service v. C.I.T., Andhra Pradesh (89 I.T.R. 274) a partnership was executed relating to a firm consisting of five partners. The fifth partner was a minor and the deed showed that he was a party repre?ented by his father. The profit or loss of the business were to be divided between the partners in equal shares. Sub?equent to the formation of the partnership, an application for registration under section 26A of the Indian Income Tax Act, 1922 was made. The four adult partners by their letter informed the Registrar of Firms that the minor was admitted to the benefits of the partnership with the consent of all the partners and that he had nothing to do with the losses; but there was nothing on record to show that the letter was sent to the Income Tax Officer. The Commis?ioner and the Appellate Tri