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Validity of continuation of registration for a partnership firm after a minor partner attains majority without a new deed of partnership. Analysis: The High Court of Madras addressed the issue of whether the registration of a partnership firm could be cancelled due to the absence of a new deed of partnership after a minor partner attained majority. The firm in question, Kikani and Company, had admitted a minor partner to the benefits of partnership, who later became a full-fledged partner by virtue of inaction after attaining majority. The firm had filed Form No. 11A to report changes in the loss-sharing ratio among partners. The Income-tax Officer initially granted registration based on this change. However, the registration was later cancelled on the ground of the firm not being genuine under section 186 of the Act. The Commissioner of Income-tax (Appeals) allowed the appeal, stating that the cancellation was based on a Revenue audit objection and that no new deed of partnership was required for the continuation of registration. The Tribunal also supported this view, citing departmental circulars. The Revenue argued that a new deed was essential to reflect changes in the loss-sharing ratio among partners. They referred to various court decisions emphasizing the necessity of a new deed in such cases. The High Court analyzed the Supreme Court's decision in Progressive Financers v. CIT, which highlighted that minor omissions in documents should not deprive a firm of registration benefits. The court emphasized that reasonable construction of documents could infer necessary details, even if not explicitly stated. In this case, the court found that the firm's registration should not have been cancelled solely due to the absence of a new deed of partnership after the change in the loss-sharing ratio. The court concluded that the continuation of registration for the firm was valid, even without a new deed of partnership. They ruled in favor of the assessee, directing each party to bear their respective costs. The judgment highlighted the importance of substance over form in assessing the genuineness of a firm and registration requirements in such cases.
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