Firm registration cannot be denied automatically when a minor partner attains majority; partnership deed terms must be examined.

Continuation of registration of a firm cannot be refused merely because a minor admitted to the benefits of partnership attains majority and becomes a partner without a fresh deed. Refusal may still be justified where the partnership deed does not contemplate that event or provide for allocation of profits and losses after majority is attained. The matter therefore requires examination of the partnership deed and the surrounding terms before deciding continuation of registration and the validity of the revisional order under section 263 of the Income-tax Act.

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Issues: Whether continuation of registration of a firm could be refused merely because a minor admitted to the benefits of partnership attained majority without execution of a fresh partnership deed, and whether the Commissioner's revisional order under section 263 of the Income-tax Act, 1961 required reconsideration on that basis.

Analysis: The governing view was that continuation of registration cannot be denied solely on the ground that a minor admitted to the benefits of partnership has become a partner on attaining majority. However, refusal may still be justified where the partnership deed did not contemplate that eventuality and made no provision for distribution of profits and losses on the minor attaining majority. The Tribunal had not examined the matter from this broader perspective or in the light of the terms of the partnership deed.

Conclusion: The legal position was answered against an automatic refusal of continuation of registration on the mere ground of attainment of majority, but the matter was sent back for fresh examination of the continuation of registration and the validity of the Commissioner's order in accordance with the stated principles.

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