1. This is a reference under Section 256(1) of the I.T. Act, 1961, hereinafter referred to as 'the Act', at the instance of the CIT, Madhya Pradesh, Nagpur and Bhandara. The question, which has been propounded by the Income-tax Appellate Tribunal for our decision, is as follows :
'Whether, on the facts and in the circumstances, the Appellate Tribunal was justified in law in granting registration to the firm for the assessment year 1961-62, though Shri Rameshchandra, who had been admitted to the benefits of the partnership, being a minor, had attained majority at the time when the application for renewal was made and the same had not been signed by him ?'
2. The material facts giving rise to this reference briefly are as follows : The assessee is M/s. Ganpatji Tuniyabhai of Khargone. For the assessment year 1961-62, the assessee submitted an application for renewal of registration of the firm under Section 26A of the Indian I.T. Act, 1922. The application was rejected by the ITO on the short ground that as the guardian of certain minors, who were admitted to the benefits of partnership, had signed the deed of partnership, the minors became full-fledged partners contrary to law and the partnership was, therefore, illegal. On appeal, the AAC held, relying on CIT v. Shah Mohandas Sadhuram : 57ITR415(SC) , that the fact that the guardian of the minors, who were admitted to the benefits of the partnership, had signed the deed of partnership on behalf of the minors was not a fatal defect and that fact, therefore, could not be a ground for rejecting the application for renewal of the registration. The learned AAC, however, held that as the application, which was filed in June, 1961, was not signed by Rameshchandra, who had become a major in June, 1961, the order passed by the ITO refusing the renewal of registration was justified on that ground. The assessee then preferred a second appeal before the Tribunal. The Tribunal held that so far as the assessee was concerned the accounting year ended on 20th October, 1960, when Rameshchandra was admittedly a minor. The Tribunal, therefore, held that as Rameshchandra was a minor during the accounting year, when the original partnership deed was in force, the application for renewal of registration for the assessment year 1961-62 was not rightly refused. The Tribunal, therefore, held that the assessee was entitled to renewal of registration for the assessment year 1961-62.
3. In our opinion, the Tribunal was right in coming to the conclusion that it did. Section 26A of the Indian I.T. Act, 1922, reads as follows:
'26A. Procedure in registration of firms.--(1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or super-tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed ; and it shall be dealt with by the Income-tax Officer in such manner as may be prescribed.'
4. Rule 6 of the Indian I.T. Rules, 1922, made in this behalf, reads as follows;
'6. Any firm to whom a certificate of registration has been granted under rule 4 may apply to the Income-tax Officer to have the certificate of registration renewed for a subsequent year. Such application shall be signed personally by all the partners (not being minors) of the firm, or, where the application is made after dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased and accompanied by a certificate in the form set out below. The application shall be made before the 30th day of June of the year for which assessment is to be made provided that the Income-tax Officer may entertain an application made after the expiry of the said date, if he is satisfied that the firm was prevented by sufficient cause from making the application before that date.'
5. The form of application prescribed by the Rules and the note appended thereto make it absolutely clear that the application for renewal is required to be signed personally only by those partners who are not minors. In view of the admitted fact that Rameshchandra was a minor during the accounting year which ended on 20th October, 1960, the application for renewal of the registration for the assessment year 1961-62 was not required to be signed by Rameshchandra as he was a minor admitted to the benefits of the partnership for the accounting year ending on 20th October, 1960. The Tribunal was, therefore, justified in holding that the assessee was entitled to the renewal of registration for the assessment year 1961-62.
6. Shri Mathur, learned counsel for the department, referred to a decision in Kishore Chand Ramji Dass v. CIT . But that decision is distinguishable on facts. In that case, it was found that though one Harischandra had become a major on 1st November 1953, he had signed the application for registration of the assessee-firm for the accounting year ending on 31st March, 1954. In the instant case, as we have already observed, it is not disputed that Rameshchandra was a minor throughout the accounting year ending on 20th October, 1960. Learnedcounsel for the department did not bring to our notice any decision in support of the proposition canvassed before us that the application for renewal of registration was liable to be rejected because it was not signed by a person who, though a minor during the entire accounting year, had attained majority when the application for renewal of registration for the relevant assessment year was made. This proposition, as we have already shown, runs counter to the relevant Rules prescribed therefor.
7. For all these reasons, our answer to the question referred to us is that on the material on record the Tribunal was right in law in granting the application for renewal of the registration of the firm for the assessment year 1961-62, though Shri Rameshchandra, who had been admitted to the benefits of the partnership as a minor, had attained majority at the time when the application for renewal was made and the same had not been signed by him. The reference is answered accordingly. The department shall pay costs of this reference to the assessee. Counsel's fee is fixed at Rs. 200 (Two hundred).