9911796707
TMI Blog1995 (10) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------------------------------------------- Sl. No. Name of the partners Share in profits Share in losses --------------------------------------------------------------------------------------------------------------------------------------------------- 1. Ramchandra Gupta 17 per cent. 25 per cent. 2. Hiralal Agrawal 17 per cent. 25 per cent. 3. Ramesh Kumar Gupta 17 per cent. 25 per cent. 4. Ram Kumar Gupta 17 per cent. 25 per cent. 5. Om Prakash Goyal 16 per cent. Nil as minor. 6. Balkishan Goyal 16 per cent. Nil as minor. --------------------------------------------------------------------------------------------------------------------------------------------------- On January 5, 1974, one of the two minors admitted to the benefits of partnership, viz., Om Prakash Goel, attained majority and elected to continue as a partner vide supplementary agreement dated January 6, 1974. As per clause 2 of the said supplementary agreement, clause 5 of the original deed of partnership dated November 6, 1972, stood amended as under : ------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own that where there is a change in the shares of the partners, the same would amount to change in the constitution of firm and in that case, the assessee would have to apply for fresh registration under section 185 and accordingly the declaration given in Form No. 12 seeking continuation of regis tration under section 184(7) was not in order. Section 184(8) clearly provides that where any change in the constitution has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section. The Board's circulars cited by the assessee are only in respect of cases where a minor admitted to the benefit of partnership becomes a full-fledged partner. It has been provided that where there is no change in the profit/loss sharing ratios a new partnership deed may not be necessary. The same would not be applicable to the facts of the instant case where there had been change in the profit/loss sharing ratios and, therefore, in view of the clear provisions of sections 187(2) and 184(8), the assessee should have sought fresh registration for the assessment years 1976-77 and 1977-78 and a declaration file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal has come to the conclusion that the circular dated August 4, 1977, was subsequent to the decision in the case of CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (sic). Therefore, it is presumed that the Board has taken into consideration the subsequent decision of the Allahabad High Court. The view taken by the Tribunal does not appear to be justified. It may be relevant to mention here that there was a conflict of judicial opinion in the Allahabad High Court regarding interpretation of this provision of the Act. In the earlier decision of the Allahabad High Court in the case of Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696, the Allahabad High Court took the view that whenever a minor is admitted for the benefit on attaining majority and is inducted as partner of the firm, change takes place in the constitution and the firm must apply for fresh registration under section 184(8) of the Act. This view was followed in the judgment in CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (All) (sic). Therefore, the Board keeping in view this judgment, issued circular on March 20, 1969. Both these judgments came up for consideration before the Full Bench of the Allahabad High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Mill [1986] 159 ITR 807 (MP). This court has followed the decision of the Full Bench of the Allahabad High Court in Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858. Shri Nema, learned counsel for the non-applicant, submitted that in the present case, the situation is different here. Here a supplementary partnership agreement has been drawn up and the minor has been admitted to the benefits. It has been referred that there was no execution of the supplementary partnership agreement and in that event, there is no change in the position. A supplementary agreement is nothing but a new partnership agreement so far as induction of a new partner is included. Under section 30 of the Partnership Act, minor is only admitted to the benefit of the partnership benefit only as the minor cannot be inducted as partner. Now when Om Prakash Goyal has become major and been inducted as partner, he will equally share the profits and losses in the firm. It is true that in cases where there is a stipulation that the minor upon becoming major will become a full partner in that case no separate agreement is required and there will be continuation of registration, but in the present case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court as well as by the Allahabad High Court and the law has been laid down by this court, therefore, the circulars are not binding to that extent unless the new circular has been issued keeping in view the decision of this court as well as the Allahabad High Court. Once section 187 of the Income-tax Act has been interpreted, this circular cannot be binding on this court, and the circular will not change the position. The learned Tribunal made certain observations regarding the fact that before issuance of the circular, the authorities must have taken into consideration the decision of the Allahabad High Court. That may be true or may not be true but the Full Bench decision has overruled both these decisions and the Full Bench decision will prevail. In view of the fact that we have taken the view that induction of Om Prakash Goyal as a partner of the firm amounted to change in the constitution, therefore, the reference is accordingly answered. Hence, the reference is answered in favour of the Revenue and it is held that the induction of a minor partner, Om Prakash Goyal, as a member of the partnership firm, will amount to change in the constitution of the firm. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
