C. S. P. SINGH, J.

( 1 ) THE assessee is a firm. The dispute relates to the assessment year 1973-74. Originally this firm consisted of Sri Mata Prasad and Sri Lakhan Lal. These persons were partners in the firm as karta of their HUFs, and had 50% share each. With effect from 1st April, 1972, Sri Pradeep kumar, a junior member of the family of Sri Mata Prasad; also joined the firm as a partner. This was done by executing a partnership deed on April 24, 1972. Sri Pradeep Kumar did not bring any capital of his own for investment in the firm. The deed recited that Mata Prasad and Lakhan lal shall continue to be partners on behalf of their respective HUFs having a share of 40% each, and Pradeep Kumar, who was being taken in as a working partner, was given 20% share. The reconstituted firm applied for registration under Section 185 of the Act. The ITO rejected the application following the decision of the Bombay High Court in the decision in Manilal dharamchand v. CIT [1970] 78 ITR 96. The assessee appealed, but the AAC held that Pradeep kumar could not become a partner in the firm in which his HUF was already a partner through its karta. In his view this would amount to an agreement of

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