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TMI Blog1981 (7) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... e benefits of partnership, attained majority on 14th March, 1973. The assessee s accounting year was Diwali Year and the relevant accounting year for asst. yr. 1974-75 is the period from 6th November, 1972 to 25th October, 1973. Shri Yogesh Kumar did not issue any public notice of either electing to continue as a partner or opting out of the partnership within six months, or for that matter even later, of his attaining majority. Admittedly, he became a partner by virtue of proviso to sub-s. (5) of u/s. 30, which reads, "provided that if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months". Six months expired on 14th September, 1973, which also falls during the accounting year. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary before renewal of registration is allowed. It was also contended that Audit objection could not form the basis of jurisdiction. The CIT (Appeals) accepted the assessee s argument on all the counts. He found in favour of the assessee both on the question of jurisdiction and merits. 3. In the departmental appeals, the decision of the Allahabad High Court in the case of Bhagat Shyam Co. vs. CIT (1980) 123 ITR 164 (All) is cited as an authority in justification of the ITO s order. According to these grounds, there was no operative deed from 14th March, 1973 to 1st July, 1975 and that the absence of such operative deed justified the cancellation of the continuation of registration ordered by the ITO earlier. The ld. Deptl. Rep. claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he partnership deed read with this clause, he pointed out, clearly showed that the profit sharing ratio, both in times of profits as well as losses, continued to remain the same. Under the circumstances, he claimed that there was no basis for holding that there was anything wrong on the part of the assessee in not having a fresh partnership deed. He pointed out to a Board s circular dt. 3rd January, 1962 which directed the ITOs not to refuse registration merely on the ground that there was new partnership deed on a manor admitted to the benefits of partnership becoming a fullfledged partner on attaining majority. It also appears that the Board reiterated its view in its further circular dt. 20th March, 1969 even after the decision of the Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 no longer extends to Shri Yogesh Kumar relief from losses and that if projected to the date of his attaining majority or six months later make the earlier deed as well as the devision different from what should have been the real agreement. This according to him, justified the inference of non-genuineness. 5. We have carefully considered the facts as well as the arguments. We will deal with the merits first. Shri Yogesh Kumar attained majority on 14th March, 1973 and became a partner by virtue of s. 30 of the Indian Partnership Act w.e.f. 14th September, 1973, both dates falling in the accounting year ending on 25th October, 1973 relevant for asst. yr. 1974-75. There was no new deed till 1st July, 1975 when there was a change in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The presumption raised in s. 13 (b) of the Indian Partnership Act as to equal rights where there is no specification of shares could not also help the assessee because of unequal shares in profits. Since the Income-tax law required that the share of the partners, both in profits and losses, had to be defined, the Supreme Court found that the assessee, in that case, was not eligible for registration. It is not so in the present assessee s, case. Cl. 8 of the partnership deed clearly defined the share of losses between the adult partners and hence there was no uncertainty as to the precise profit sharing ratios in respect of losses when this deed is r/w s. 30(7) of the Indian Partnership Act, 1932. The decision of the Allahabad High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and interests of the partner attaining majority after his having become a major. We therefore find that there is no case for cancellation of the earlier orders. 6. Even as regards jurisdiction, we find that we have to agree with the arguments of the ld. counsel for the assessee. Sec. 186(2) indicates that cancellation could be there only where there is "no genuine firm in existence as registered within the meaning of s. 186(1). There is no material whatsoever for assuming that there was no genuine firm in existence. Neither the absence of a fresh deed on the minor attaining majority nor the change in the constitution of the firm from 14th November, 1974 after the two accounting years under consideration, could throw any doubt on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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