1983 (3) TMI 124 - AT - Income Tax

Summary

Issues:
1. Continuation of registration under Form No. 12 for consecutive assessment years 1975-76 to 1977-78.
2. Interpretation of Section 184(7) regarding the change in the constitution of the firm due to the attainment of majority by minor partners.

Analysis:
1. The appeals by the revenue for the consecutive assessment years 1975-76 to 1977-78 were against the combined order of the AAC. The assessee sought continuation of registration under Form No. 12, as registration was previously granted. The issue revolved around the filing of Form No. 11A and a new deed, which the assessee later stated was filed as a precaution. The Tribunal previously held that there was no change in the constitution of the firm, leading to the continuation of registration. The revenue contended that there were significant differences between the years in question, including the expiration of the election period for a partner and the absence of an agreement on sharing losses by minor partners. However, the Tribunal upheld the AAC's decision, emphasizing that there was no change in the share ratio of profits, which is crucial for determining a change in the constitution of the firm.

2. The core issue involved the interpretation of Section 184(7) regarding the change in the constitution of the firm due to the attainment of majority by minor partners. The revenue argued that the filing of Form No. 11A and a new deed indicated a change in the firm's constitution. However, the Tribunal relied on the interpretation provided by the Bombay High Court, which clarified that a change in the share of partners pertains to profits and not losses. As there was no alteration in profit-sharing ratios, the Tribunal held that there was no change in the constitution of the firm. The mere filing of additional documents did not alter this legal position. Consequently, the Tribunal dismissed all appeals, affirming the assessee's entitlement to continuation of registration under Section 184(7) based on the facts of the case and the absence of a change in the firm's constitution.