Ajit K.Sengupta, J. - (1.) At the instance of the Commissioner of Income-tax, West Bengal-IX, the following question of law has been referred to this court under Section 256(2) of the Income-tax Act, 1961, for the assessment year 1973-74 : "Whether, on the facts and in the circumstances of the case and on a proper construction of the deed dated the twenty-sixth day of December one thousand nine hundred and sixty seven and the deed dated the twenty-fourth day of November one thousand nine hundred and seventy, the Tribunal was correct in holding that a genuine firm was in existence during the year and the same was entitled to registration ?"
(2.) Shortly stated, the facts are that the assessee claimed to be a partnership firm. There was a change in the constitution of the firm in the preceding year and a new deed was executed on November 24, 1970, with effect from September 1, 1970. As in the case of the earlier partnership deed, under this partnership deed also, a minor was purported to have been admitted to the benefits of the partnership. One of the clauses of the partnership deed (Clause 8) is as follows : "The capital of the firm, as and when required, shall be provided by the partners and the minor admitted to the benefits of partnership in proportion to their respective shares. If any partner or minor fails to provide his share of the capital either in full or part, interest shall be charged from him at such rate as the partners may decide not being less than the highest rate at which the partnership may have taken loan from its bankers or any of the partners or any outside source during the year for which the accounts are made up."
(3.) The deed was signed by the partners but was not signed by the guardian of the minor accepting the terms and conditions of the partnership. The assessee filed an application for registration in respect of the assessment year 1971-72 in Form No. 11A of the Income-tax Rules, 1962. The Income-tax Officer declined to grant registration for that year on the ground that registration was refused to the assessee in earlier years and that there had been no change in the relevant circumstances during the year under consideration. In the year under consideration, the assessee filed a declaration under Section 184(7) claiming the benefit of continuation of registration. As the assessee was not allowed registration for the preceding year, the Income-tax Officer declined to allow the benefit claimed.;