Continuation of registration of a partnership firm cannot be refused simply because a minor admitted to the benefits of the partnership has become a full-fledged partner on attaining majority, provided that the partnership deed envisages such an eventuality and provides for the distribution of profits and losses.

G.P. Singh, C.J.

1. This is a reference made by the Income Tax Appellate Tribunal referring for our answer the following question of law :

" Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in directing the Income Tax Officer to allow registration to the assessee ? "

2. The reference relates to the assessment years 1971-72 and 1972-73. The assessee-firm was constituted by a deed of partnership executed on 10th November, 1961, and it consisted of four partners and three minors were admitted to the benefits of the partnership. The minors attained majority on 4th May, 1966, 27th May, 1967, and 21st July, 1971, respectively, and elected to become partners. The partnership was not granted continuation of registration for the assessment years 1967-68, 1968-69 and 1969-70. There was a reference to this court in respect of these assessment years. The judgment of the court, in this reference, is Durgaprasad Rajaram Adatiya v. CIT [1982]134ITR601(MP) . It was held that as the instrument of partnership did not provide as to how the losses would be distributed after each minor became major and elected to become a partner, the partnership could not be granted continuation of registration. In the normal course, following that decision, we should hold that the Tribunal was in error in granting continuation of registration for the assessment years 1971-72 and 1972-73. The Tribunal has, however, relied upon two circulars, one issued by the CBR and the other by the CBDT. The first circular is dated 3rd January, 1962. It is to the effect that where there is no doubt about the genuineness of a partnership, registration need not be refused simply because a minor previously admitted to the benefits of the partnership has been made a full-fledged partner on attaining majority and no new partnership deed has been drawn up to give effect to this change. The second circular is dated 20th March, 1969. It is stated therein that the Board was of the opinion that the view taken by the Allahabad. High Court was a narrow view of the law and the claim for continuation was not to be refused simply because a minor previously admitted to the benefits of the partnership had been made a full-fledged partner on attaining majority and no new partnership deed had been drawn up to give effect to this change if the firm was otherwise genuine. The view then held by the Allahabad High Court was that in every case whenever a minor admitted to the benefits of a partnership attained majority and elected to be a partner of the firm, there was a change in the constitution of the firm and the partnership was not entitled to continuation of registration. This view was taken in Ganesh Lal Laxmi Narain v. CIT [1968]68ITR696(All) and Ram Narain Laxman Prasad v. ITO [1972]84ITR233(All) . It was to get over this view that the Board issued the second circular of 1969. The view taken by the Allahabad High Court in these cases was overruled by a Full Bench in Badri Narain Kashi Prasad v. Addl. CIT [1978]115ITR858(All) . The view of the Full Bench is that if the deed of partnership envisages the eventuality of the minor becoming a full-fledged partner on attaining majority and provides for the distribution of profits and losses, in that event, there would be no change in the constitution of the firm and the partnership would be entitled to continuation of the registration. It is this view which our High Court followed in Ganesh Rice Mills v. CIT [1981]132ITR257(MP) and Durgaprasad Rajaram Adatiya v. CIT [1982]134ITR601(MP) . According to the view that now prevails, continuation of registration cannot be refused simply on the ground that a minor admitted to the benefits of the partnership has become a partner on attaining majority. It will be refused on the ground that the eventuality of the minor becoming a partner on attaining majority was not foreseen in the deed of partnership and it does not provide for the distr