1996 (4) TMI 81 - HC - Income Tax

Summary

Issues:
1. Interpretation of partnership deed for registration.
2. Continuation of registration for a firm.

Interpretation of Partnership Deed for Registration:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding the interpretation of a partnership deed for registration. The Tribunal was questioned on whether the original deed dated November 14, 1955, along with an endorsement dated September 10, 1961, constituted an instrument of partnership for registration purposes. The Tribunal initially rejected registration due to a perceived change in the firm's constitution. However, the Appellate Tribunal later found that the endorsement by a minor partner upon attaining majority was sufficient to constitute a fresh partnership, allowing for registration. The High Court held that the endorsement by the minor partner indeed constituted a fresh partnership for registration under section 185 of the Act.

Continuation of Registration for a Firm:
The second issue revolved around the continuation of registration for the firm. The Tribunal directed the Income-tax Officer to allow the assessee to rectify a mistake in Form No. 11 for a grant of fresh registration. The High Court clarified that this rectification would lead to a grant of fresh registration under section 185 of the Act, not a continuation of registration under section 184(7). The Court emphasized that the grant of fresh registration was based on the endorsement made by the minor partner upon attaining majority, despite the belated filing of the application. The Court distinguished previous cases related to the grant of continuation of registration and concluded that the first question in favor of the assessee for a fresh registration, rendering the second question irrelevant in this context.

In conclusion, the High Court ruled in favor of the assessee, directing the Income-tax Officer to grant fresh registration to the firm upon rectification of Form No. 11 as per the Tribunal's directive. The judgment clarified the distinction between continuation and fresh registration, highlighting the significance of the endorsement by the minor partner in establishing a new partnership for registration purposes.