SARMAH P N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) : The sole question referred to this Court u/s. 256(1) of the IT Act, 1961, for eliciting the opinion of this Court is :

(2.) THE assessee is a firm. THE relevant assessment year is 1968- 69, corresponding previous year being Deewali Samvat, 2023. THE assessee-firm filed an application in Form No. 11 of the IT. Rules seeking registration u/s. 185 of the Act on October 30, 1961, and annexed therewith the instrument of partnership executed on November 12, 1967. As an abundant caution the assessee made another application on June 28, 1969, in Form No. 11A, along with a memorandum of agreement dated October 30, 1967, praying for condonation of the delay in filing the same by a separate application. THE partnership was constituted of 4 partners, namely, Purnananda Sarmah, Omprakash Sarmah, Vijoy Kumar Sarmah and Krishna Kumar Sarmah. Shri Purnananda Sarmah is the father of the 3 other partners. THE partnership was evidenced by a registered partnership deed. Shri Ved Prakash Sarmah, minor son of Shri Purnananda Sarmah, was admitted to the benefits of the partnership by mutual consent of the partners w.e.f. November 12, 1976. In so far as the sharing of profits and losses of the partners and sharing of profit by the minor admitted to the benefits of the partnership are concerned, they find place in cl. 9 of the partnership deed at page 7 of the paper book. It reads:

(3.) VED Prakash Sarmah 20per cent Nil the relevant previous year, that is, 31-10-67 VED Prakash remained interested in the firm but without being supported by any document. Whether in such a circumstance the partnership firm could obtain registration in view of the provisions of S. 184(1) of the IT Act, 1961 ?" 5. The Tribunal considered the provisions of S. 184(1) and held that VED Prakash, after the attainment of majority, became a partner of the firm only from the beginning of the following previous year and he did not opt to become a partner of the firm during the period from September 1, 1967, to October 31, 1967, and, accordingly, registration could not be granted to the firm. It relied on the decision in Ganesh Lal Laxmi Narain vs.CIT (1968) 68 ITR 696 (All) and Ram Narain Laxman Prasad vs. ITO (1972) 84 ITR 233 (All) and held that it was a requisite for a minor, upon attaining majority, to execute a partnership deed afresh along with the existing partners for obtaining registration u/s. 184(1) of the IT Act. The Tribunal held that VED Prakash, on attaining majority, elected to be a partner of the assessee-firm only from the beginning for the succeeding previous year, that is, November 1, 1967, but did not opt to become a partner during the period from September 1, 1967, to October 31, 1967, and, hence, the firm was not entitled to registration u/s. 185(1) of the Act.