Per Shri P. S. Dhillon, Judicial Member - The revenue has preferred this appeal against order dated 16-7-1983 of Shri Y. N. Bhatt, AAC, Bhavnagar who allowed the appeal against order dated 8-3-1983 of Shri M. Vijayan, ITO, Bhavnagar passed in the assessment year 1980-81.
2. The only ground in this appeal is that the AAC erred in law and on facts in directing the ITO to grant continuation of registration under section 184(7) of the Income-tax Act, 1961 (the Act) to the assessee-firm.
2.1 The relevant facts in brief are that the assessment year involved is 1980-81, the previous year of which ended on 30-6-1979. The assessee filed the return of income and thereby made claims, inter alia, that the assessee-firm was entitled for continuation of registration under section 184(7) for the assessment year under consideration. The ITO did not accept the claim of the assessee and thereby held that the firm was not entitled for continuation of registration under section 184(7) for the assessment year 1980-81 in view of the fact that one of the minors admitted to the benefits of the partnership attained majority during the accounting year on 2-3-1979. The ITO observed in support of his action relied upon the decision in the case of Mandyala Govindu & Co.
v. CIT  102 ITR 1 decided by their Lordships of the Supreme Court where their Lordships held that the firm should not be granted registration if sharing ratio of partners in loss were unknown from the partnership deed. From this ratio of the aforesaid decision of their Lordships of the Supreme Court, the ITO took the view that, in other words from the partnership deed both shares of profits as well as loss should be known and hence, firm failed to get continuation of registration. Accordingly, he held that for the assessment year 1980-81, the assessee-firm would be taxed as unregistered firm.
3. The assessee went in appeal before the AAC who allowed the appeal of the assessee and thereby directed the ITO to grant continuation of registration under section 184(7) and to treat the firm as registered firm. The AAC for arriving at his conclusion (supra), relied upon the decision of the Honble Allahabad High Court in the case of CIT v.Mathura Prasad Annoolal  115 ITR 372 and distinguished the case relied upon by the ITO in the case of Mandyala Govindu & Co. (supra).
4. The revenue being aggrieved has preferred this appeal. Shri Malik, the learned departmental representative, challenging the order of the AAC in granting registration to the assessee has contended that the AAC erred in law and on facts in directing the ITO to grant continuation of registration under section 184(7) to the firm. He further contends that the ITO was not justified in assessing the assessee as unregistered firm and, therefore, his order is to be restored and that of the AAC is to be set aside. He relies on the order of the ITO.5. We have heard the rival contentions and gone through the records before us. The contentions of the parties before us are merely repetitive as that of the assessee before the AAC and that of the ITO.Therefore, we have to see whether the ITO is justified in assessing the firm as unregistered firm on the facts and circumstances of the case, or the AAC in justified in directing the ITO to grant continuation of registration under section 184(7) to the assessee-firm. The previous year relevant for the assessment year 1980-81 ended on 30-6-1979. It is an admitted position that one of the partners attained majority age on 2-3-1979 and he did not opt for continuity of partner in the partnership firm which he is to opt within six months from the date of attaining the majority age. Therefore, in this situation of the matter, whether the firm should be treated as unregistered or not in the question for the determination of the Tribunal in this appeal. It is also an admitted position that the minor Shri Madhuker Bhupatray Mehta who attained the age of majority on 2-3-1979 opted to be out of the firm with effect from 1-7-1979. Thus, from the aforesaid facts, it is manifest that Shri Madhuker Bhupatray Mehta who became major on 2-3-1979 merely opted to be out of the firm as partner with effect from 1-7-1979, though he was entitled to use this option within six months from the day he attained majority age, i.e., up to 2-9-1979. Thus, the question is that if a minor who became major did not opt within the prescribed period of six months to be the partner of the firm or not, then, whether the firm is to be treated as unregistered firm or not. We are of the opinion that if the minor failed to opt to continue as partner within six months on attaining the majority age, then the firm is to continue as registered firm for the previous year relevant for the assessmment year under consideration. The reason is that section 30(5) of the Indian Partnership Act, 1932 gives a period of six months to exercise this option to continue or not as partner, in the firm, therefore, the question does not arise to take the firm as unregistered firm, on the day a partner who was minor in the partnership becomes major; but such minor fails to apply his option to become the partner or continue as partner in the partnership, in view of the fact that the period of six months is there for him to apply or use such option. In this case, the period for applying the option is up to 2-9-1979, while the previous year ended on 30-6-1979. Therefore, on the facts of the case, the firm is to be treated as registered firm and to continue as such up to 2-9-1979. In this case, the previous year relevant for the assessment year ended on 30-6-1979, therefore, the question does not arise to treat this firm as unregistered firm in view of the provisions of section 30(5). On this sole ground the order of the ITO cannot be restored being erroneous in law and facts. Furthermore, the AAC has assigned cogent and relevant reasons with which we agree, as his reasons are supported by the decision of the Honble Allahabad High Court in the case of Mathura Prasad Annoolal (supra). The AAC has rightly distinguished the case relied upon by the ITO and rightly decided the issue on keeping reliance on the case of Mathura Prasad Annoolal (supra). In view of our above discussion and reasons thereto, we hold that the AAC is justified in directing the ITO to grant continuation of registration under section 184(7) to the assessee-firm on the totality of the facts and circumstances of the case. Hence, we confirm his order.