Income-tax---

----Firm---Circular---Registration of firm---Continuation of registration-- Minor admitted to benefits of partnership attaining majority and becoming partner in accounting year relevant to assessment year 1976-77---No fresh deed of partnership executed---Circular dated 3-1-1962, stating that in such cases firm would be entitled to continuation of registration---Subsequent circular dated 4-8-1977 repealing earlier circular---Circular dated 4-8-1977 was prospective in operation---Case covered by earlier circular---Firm entitled to continuation of registration---Indian Income Tax Act, 1961, S.185.

For the assessment year 1976-77, the assessee sought continuation of registration granted to it under subsection (7) of section 184 of the Income Tax Act, 1961, by submitting an application in Form No. 12 as prescribed in the rules. The Income-tax Officer refused to continue the registration as he found that during the relevant accounting year two minors admitted to the benefits of the partnership had become majors and no fresh partnership deed had been executed evidencing that fact. On appeal by the assessee, the Appellate Assistant Commissioner relying on a circular of the Central Board of Direct Taxes (Circular No.F. 26/35/61 I.T.A.-1, dated January 3, 1962) was of the view that there was no doubt about the genuineness of the partnership and directed the Income-tax Officer to allow continuation of the registration of the assessee-firm. The Tribunal upheld the order. Meanwhile another circular of the Central Board of Dirt Taxes, dated August 4, 1977, came into force repealing the earlier circular. On a reference:

Held. that the operation of the circular, dated August 4, 1977, would be prospective. The Tribunal, therefore, rightly held that the circular of 1962 applied in the present case. The assessee-firm was entitled to continuation of registration.

S.K. Sharan for the Commissioner.

A.K. Rastogi and Shailendra Kumar for the Assessee.

JUDGMENT

At the instance of the Revenue, the Income-tax Appellate Tribunal, Patna Bench, Patna referred to this Court the Following two questions for the assessment year 1976-77 for its opinion:

"(1) Whether, on the facts and in the circumstances of the case was Tribunal justified in holding that the Income-tax Officer's Order passed under section 184(7) was an appealable order?

(2)Whether, on the facts and in the circumstances of the case the Tribunal was justified in law in holding that the assessee-firm was entitled to registration even though no fresh deed of partnership was executed on the attainment of majority by two minors admitted to the benefits of the partnership?"

Mr. Sharan, learned counsel for the Revenue does not press the first question and we, therefore, need not answer the same.

As regards the second question, we may briefly note the facts.

The assessee-firm had been granted registration prior to the assessment year in question. For the assessment year 1976-77, the assessee sought continuation of registration granted to it under subsection (7) of section 184 of the Act by submitting an application in Form No. 12 as prescribed in the rules. The Income-tax Officer refused to continue the registration as he found that during the relevant accounting year two minors admitted to the benefits of the partnership had become majors and no fresh partnership deed had been executed evidencing that fact. On appeal by the assessee, the Appellate Assistant Commissioner relying on a circular of the Central Board of Direct Taxes Circular No.F. 26/35/61 I.T.A.-1, dated January 3, 1962) was of the view that there was no doubt about the genuineness of the partnership and directed the Income -tax Officer to allow the continuation of the registration of the assessee-firm.

The appeal of the Revenue to the Appellate Tribunal against the order of the Appellate Assistant Commissioner failed.

In the meanwhile, it appears that another circular of the Central Board of Direct Taxes, dated August 4, 1977, came into force repealing the earlier circular. Mr. Sharan, learned counsel contended that on the date of the assessment order, the later circular was in force and the Appellate Assistant Commissioner and the Tribunal should have relied on the later circular and not the one of the year 1962. We do not think that the contention raised by Mr. Sharan is right. According to us, the operation of the circular, dated August 4, 1977 would be prospective. The Tribunal, therefore, rightly held that the circular of 1962 applied in the present case.

Accordingly, on the second question, our answer would be in the affirmative, in favour of the assessee and against the Revenue. There will be no order as to costs.

M.B.A./1538/FCOrder accordingly.