Continuation of firm registration depends on whether the original partnership subsists or a successor firm arises after partner retirement.

Continuation of registration under section 184(7) of the Income-tax Act, 1961 is available only while the registered firm continues to subsist without the relevant change. On the facts discussed, the retirement of two partners on 10 December 1967 brought about dissolution of the original partnership and the business thereafter passed to a successor firm. Section 187(2) was treated as recognising a change in constitution when partners cease to be partners, supporting the conclusion that the matter involved succession rather than continuation of the same firm. Continuation of registration was therefore confined to the period during which the original firm existed, and the claim was allowed for that period.

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Issues: Whether the firm was entitled to continuation of registration under section 184(7) of the Income-tax Act, 1961 up to the date on which two partners retired, in the facts showing cessation of the original partnership and formation of a successor firm.

Analysis: The original firm continued to exist until the retirement of two partners on 10 December 1967. On the facts found, the retirement of the partners brought about dissolution of the earlier firm and the business thereafter passed to a new partnership. In such circumstances, the claim for continuation of registration was confined to the period during which the original firm subsisted. Section 184(7) permits continuation where the registered firm continues without the relevant change, while section 187(2) recognises a change in constitution when one or more partners cease to be partners. The Tribunal's view that the case involved succession of the firm was supported by the facts and the statutory scheme.

Conclusion: The claim for continuation of registration up to 10 December 1967 was rightly allowed and the reference was answered in the affirmative, in favour of the assessee.

Ratio Decidendi: Where the original registered firm subsists only up to the date of retirement of partners and the facts disclose succession by a new partnership, continuation of registration is allowable for the period of the original firm's existence under section 184(7) of the Income-tax Act, 1961.

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