Partnership deed continuity on a partner's death supports renewal of tax registration where shares remain unchanged.

A registered partnership deed that expressly provided for continuation of the firm on a partner's death displaced the ordinary rule of dissolution, and the heirs of the deceased partner were entitled only to the deceased partner's share in profits up to the end of that accounting year. Because the deed itself contemplated the death of a partner and fixed the resulting rights, the change in signatories to the renewal application did not alter the constitution of the firm or the individual shares as specified in the instrument. The prescribed form and Rule 6 were therefore complied with, and renewal of registration under section 26A of the Income-tax Act, 1922, was granted.

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Issues: Whether the assessee-firm was entitled to renewal of registration under section 26A of the Income-tax Act, 1922, despite the death of one partner during the relevant accounting year and the consequent change in the partners signing the renewal application.

Analysis: Clause 12 of the partnership deed provided that the death of any partner would not dissolve the firm and that the surviving partners would continue the business, while the heirs and legal representatives of the deceased partner would receive only the deceased partner's share in profits up to the end of the accounting year in which death occurred. That clause operated as a contract to the contrary for the purposes of the Partnership Act and displaced the ordinary rule of dissolution on death. It did not make the heirs and legal representatives partners in the firm or make them liable to bear losses in the same manner as the original partner. On the renewal application, the relevant question was whether the constitution of the firm and the individual shares of the partners, as specified in the registered instrument, remained unaltered. Since the original deed itself contemplated the eventuality of a partner's death and prescribed the resulting position, the change occurring in accordance with that deed did not amount to an alteration in the constitution of the firm or in the individual shares as specified in the instrument. The prescribed form and Rule 6 were therefore complied with.

Conclusion: The assessee-firm was entitled to renewal of registration under section 26A of the Income-tax Act, 1922. The answer to the referred question was in the affirmative, in favour of the assessee.

Ratio Decidendi: Where the registered partnership deed itself provides for continuity of the firm on the death of a partner and specifies the resulting rights and shares, a renewal application is valid if the constitution of the firm and the individual shares remain unaltered as specified in that instrument.

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