A change in the constitution of a firm, such as a minor attaining majority, requires the firm to apply for fresh registration under Section 184(8) of the Income-tax Act, 1961.

R.R. Rastogi, J.

1. THE Income-tax Appellate Tribunal, Delhi Bench "A", has referred the following question of law for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the Income-tax Officer was justified in cancelling the registration granted to the assessee-firm under Section 186(1) for the assessment years 1965-66, 1966-67 and 1967-68 ?"

2. THE facts leading to the present reference briefly stated are, that the applicant, M/s. Bhagat Shyam and Company, was a partnership concern constituted under a partnership deed executed on March 10, 1963. Mela Ram, Bhagat Ram and Govind Ram having Rs. 0-2-0, 0-3-0 and 0-3-0 shares, respectively, were the partners of the assessee-firm and Shyam Sundar and Radhey Shyam, minors were admitted to the benefits of the partnership and were given Rs. 0-4-0 share each in the profits of the firm. THE minors were not to share the losses which were to be borne by the three partners as under:

Govind Ram and Bhagat Rarn 371/2 % each and Mela Ram 25% THE assessee-firm followed the financial year as its year of accounting. It was granted registration for the assessment year 1963-64 and the benefit of continuance of registration for and up to the assessment year 1968-69. Subsequently, the Commissioner, by an order under Section 263 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), dated October 22, 1972, cancelled the registration for the assessment year 1968-69. Thereafter, for the years under consideration, that is, 1965-66 to 1967-68, the ITO took action under Section 186(1) of the Act, because it had come to his notice that both the minors had attained majority in the previous year ended March 31, 1964, and thereafter no fresh partnership deed had been drawn up. THE ITO was of the opinion that for the assessment year 1965-66 instead of claiming continuance of registration the assessee-firm should have applied for fresh registration and in the absence of such an application it could not be said that the assessee-firm had been constituted under a deed of partnership. He did not doubt the genuineness of the partnership. Relying on a decision of this court in Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696, he held that on the attainment of majority by the minors the firm was required to file a fresh application for registration and it was not entitled to continuance of registration. He, therefore, cancelled the registration for all these three years under Section 186(1) of the Act.

THE assessee appealed to the AAC, who decided the three appeals by a common order. According to the AAC, since the genuineness of the firm had not been doubted by the ITO, the registration granted could not have been cancelled merely on the ground that there was no partnership deed in existence. In his opinion, the decision in Ganesh Lal Laxmi Narain [1968] 68 ITR 696 (All), was under Section 185 of the Act and it had no relevance for purposes of Section 186(1). On the other hand, the decision in Sheonath Prasad Motilal v. ITO [1963] 47 ITR 493 (All), applied to the facts of the case. What had been held in that case was that registration under Section 186 of the Act could not be cancelled merely on the ground of any omission or defect in the application or in the deed of partnership. In the result, the AAC restored the original orders of the ITO by which the benefit of continuance of registration had been granted to the assessee.

THE department took the matter in three appeals for those years before the Income-tax Appellate Tribunal. In the opinion of the Tribunal, the decision in Sheonath Prasad Motilal's case [1963] 47 ITR 493 (All), was of no assistance to the assessee since that was a decision rendered under r. 6B of the Indian I.T. Rules, 1922. THE firm which was granted registration was constituted by three partners and, two minors had been admitted to its benefits. However, for the years under appeal the firm so consti