Unclear loss-sharing after minors became full partners justified refusal of firm registration continuation.

Continuation of registration of a firm may be refused where minors admitted to partnership attain majority and the deed does not clearly and unambiguously provide the revised sharing of losses after that change in constitution. The instrument must itself specify the partners' shares with precision, and the taxing authority cannot rewrite the contract to fill gaps or supply an uncertain allocation. Non-filing of the prescribed form for change in constitution was also treated as a supporting defect. On that basis, the claim for continuation of registration failed.

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Issues: Whether continuation of registration of the firm was rightly refused for the assessment years 1980-81 to 1982-83 when minors admitted to the benefits of partnership attained majority, no fresh deed or proper application was filed, and the partnership deed did not clearly specify redistribution of losses.

Analysis: The partnership deed provided for minors becoming full-fledged partners on attaining majority, but the clause dealing with their entry into partnership did not clearly state how losses were to be reallocated after such change. The deed fixed the major partners' loss sharing in one manner, yet the suggested reading of the clause left the revised loss-sharing pattern uncertain and incapable of precise working. A partnership instrument must itself specify the individual shares in a manner that leaves no ambiguity, and the taxing authority cannot rewrite the contract for the parties. The failure to file the form required for a change in constitution of the firm was also a defect supporting refusal of continuation of registration.

Conclusion: Continuation of registration was not justified and the assessee's claim failed.

Ratio Decidendi: Registration of a firm can be refused where the partnership deed does not clearly and unambiguously specify the partners' shares in losses after a material change in constitution, because the taxing authority cannot supply or rewrite the contractual allocation.

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