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Issues:
Registration of firm for assessment year 1975-76 based on change in constitution due to minor partner attaining majority and electing to become full-fledged partner. Analysis: The appeal was filed against the AAC's order for the assessment year 1975-76 regarding the firm's registration. The firm, initially consisting of three partners and three minor partners, underwent a change in constitution when one of the minor partners attained majority and elected to become a full-fledged partner. The new partnership deed reflecting this change was executed on 2-5-1975, after the accounting year ended on 31-3-1975. The AAC held that the change in constitution occurred on 18-1-1975 when the minor partner elected to become a full-fledged partner, even though the partnership deed was executed later. The AAC concluded that the firm was not entitled to registration for the period from 18-1-1975 to 31-3-1975. The appellant contended that the registration was valid as the change in constitution occurred after the accounting year, and the necessary forms were filed within the required time. The appellant's counsel argued that the AAC should have followed the directions in Circular No. F. 26-1/67-IT (A-II) and cited a decision of the Allahabad High Court to support their position. The departmental representative, however, relied on the partnership deed's clause stating the change in constitution from 18-1-1975 and argued against the registration based on prior decisions and modifications to the instructions. The Tribunal considered the provisions of sub-section (7) of section 30 of the Indian Partnership Act, 1932, which governs the rights of a minor partner electing to become a full partner. It was determined that the change in constitution only took effect from 2-5-1975 when the minor partner elected to become a full-fledged partner, maintaining the same share in profits as during minority until that date. Consequently, between 18-1-1975 and 31-3-1975, no change in the firm's constitution occurred, and the registration was deemed valid as Form No. 12 was filed within the required time. In conclusion, the Tribunal allowed the appeal, ruling in favor of the firm's entitlement to registration for the assessment year 1975-76 based on the correct interpretation of the timing of the change in constitution and the filing of necessary forms.
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