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TMI Blog1976 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1972 the assessee firm executed a fresh deed of partnership. An application in form 11A along with partnership deed was filled on 2nd Nov., 1972. The ITO however, refused registration to the assessee firm on the ground that though there were two changes during the course of the previous year but the two deeds of partnership were not executed. The assessee contended itself by writing only one deed of partnership, when Shri Basant Kumar attained majority. According to the ITO one more deed of partnership should have been executed on 1st July, 1972 when Shri Santhosh Kumar attained majority meaning thereby that there was no partnership deed between 1st July, 1972 to 2nd Oct., 1972. As such the assessee firm was not entitled to registration He also observed that the accounts were not closed on 1st Oct., 1972 in order to give effect to the changes. The assessee itself filed an application in Form No. 11A, Contemplating that there was a change in the constitution of the firm during the accounting year and it was not a case of fresh registration. 3. Aggrieved by this order. The assessee carried the matter in appeal to the AAC, who in a detailed ordered confirmed the order of the ITO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Allahabad High Court in CIT vs. National Medical Stores(3) has also held that with in six months from the date of majority of a minor, there is no change in the constitution of the firm. Even though, he has attained majority, he is deemed to be minor for the purpose of determining the constitution of the firm. 5. It is further contended that the rule of hormonious construction must be applied while construing the provisions of the IT Act and the Partnership Act. While deciding the question of registration the two acts must be construed hormoniously so that injustice may not take place to the assessees. The IT Act cannot be considered in such a manner so as to make the Partnership Act nugatory. It is also submitted by him that under the IT Act, 1961, the mere attainment of majority by a partner is not a change in the constitution of the firm. s. 187 of the IT Act defines the change in constitution and there is no such provision therein which can be taken to mean that the attainment of majority by a minor could be considered as a change in the constitution of the firm. 6. The learned departmental representative, on the other hand, contended that the Department never contested tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edge that he had been so admitted, whichever date is later. But if he fails to give such notice within the prescribed period, he ipso facto becomes a partner in the firm. His position is such a case is analogous to that of a principal who ratifies acts done for him but without his knowledge or authority by an agent. He becomes bound by all the obligations incurred by the firm from the time he was admitted to the benefits of partnership, so that if he wishes to severe his relations with the firm and not to be saddled with his obligations it is incumbent upon him to give the request notice. Failure to do so will have the legal result of imputed assent. 8. The proviso to this sub section provides that failure on the part of the minor to give the notice on attaining majority would have the legal result of imputed assent and the minor who had already attained majority would on the expiry of the prescribed period become a partner in this firm. This obviously pre-supposes that the firm is in existence at the specified point of time. If the firm has already been dissolved by that time, no question can remain or arise of any imputed assent. Where the minor attaining majority elects to bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of six months had not expired, the ITO cannot sit in judgment and refuse registration, particularly when the judicial pronouncements come to the help of the assessee. The Allahabad High Court in Ram Narain Laxman Prasad vs. ITO(1) has held that when a minor who has been admitted to the benefit of partnership attains majority and becomes a partner of the firm, there is a change in the constitution of the firm and the firm is not entitled to the continued benefits of registration previously granted to the firm. But in this case, no fresh deed of partnership was executed within six months of attaining the majority. That is why the Allahabad High Court confirmed the order of the Revenue authorities in refusing the registration. In Ganesh Lal Laxmi Narain vs. CIT(2). the facts were that a deed of partnership was executed in 1948 by two persons, A B, admitting C, a minor, to the benefits of the partnership and the deed was registered under the IT Act. In 1952 he attained majority and an application for renewal of registration was made by A,B and 'C'. It was rejected on the ground that unless a fresh deed of partnership was executed by the three partners, A,B and 'C', registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for registration. In the face of such a categorical pronouncement by the Allahabad High Court, the registration cannot be refused to the assessee firm, particularly when a fresh deed of partnership had been executed before the expiry of six months and within the previous year relevant to the assessment under appeal. The judgment of the Supreme Court in Mandyala Govindu Co. vs. CIT(4). Is not applicable to the facts of the case. In the case before the Supreme Court, the facts were that in the deed of partnership there was no clause specifying the proportion in which the adult partners were to share the losses. That was indeed a material defect in the partnership deed. 10. It will not be out of place to mention that in para 4 of the partnership deed it has been provided as under: " And whereas the parties number 5 and 6 named above on having attained majority have elected to continue as full-fledged partners sharing both in profits and losses and have accepted all the assets and liabilities of the partnership with retrospective effect from 19th Oct., 1972 (Diwali 1971) and thus a change in the constitution of the partnership has taken place, whereby it has become necessary t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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