1. The following question was referred for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that there was no change in the constitution of the firm within the meaning either of Section 187(2)(a) or section 187(2)(b) of the Income-tax Act, 1961, and the assessee-firm was entitled to the renewal of registration for the assessment years 1963-64 and 1964-65 ?" The assessee was originally constituted under a partnership deed dated 18th September, 1956, consisting of four partners, namely, Sri Madan Lal, Sri Krishna, Sri Satish Chandra and Sri Jagdish Chandra and three minors, namely, Sri Harish Chandra, Sri Girish Chandra and Sri Vijai Kumar, admitted to the benefits of the partnership. Registration was granted to the firm under Section 26A of the Indian Income-tax Act, 1922, for the assessment year 1959-60 and the same was renewed from year to year up to the assessment year 1961-62. The Income-tax Officer while scrutinising the accounts for the assessment year 1962-63 found that the loss was apportioned among the partnership in a manner different from what was contemplated in the deed of partnership. The explanation furnished by the assessee was that Harish Chandra had attained majority during the accounting year relevant to the assessment year 1962-63. The Income-tax Officer, however, was of the view that after Harish Chandra attained majority, a fresh deed of partnership should have been executed and, as this had not been done, the firm was not entitled to the renewal of the registration for the assessment year 1962-63. The Appellate Assistant Commissioner allowed the assessee's appeal as in his opinion there was no change in the constitution of the firm. The appeal filed by the Commissioner was dismissed by the Tribunal. It appears that the order passed by the Tribunal for the assessment year 1962-63 became final. For the assessment years 1963-64 and 1964-65, the Income-tax Officer refused the renewal of the registration precisely on the same ground. The Appellate Assistant Commissioner once again reversed the order passed by the Income-tax Officer against which the department filed an appeal but with no success. Before the Tribunal it was urged on behalf of the department that in the appeal for the assessment year 1962-63 the definition of the expression "change in the constitution of the firm" given in Section 187(2) of the Income-tax Act, 1961, was not brought to the notice of the Tribunal. The argument was further developed by contending that there is a change in the constitution of the firm where all the partners continue with a change in their respective shares or in the shares of some of them. It was urged that since Harish Chandra attained majority there was a change in the shares of losses, it should be taken as a change in the shares of the partners within the meaning of Section 187(2)(b). The Tribunal, on the argument advanced on behalf of the department, posed the question in the following manner:

"A fresh partnership deed was executed only on 28th July, 1964. However, the question that arises for determination is as to whether there was a change in the constitution of the firm within the meaning of Section 187(2) of the Income-tax Act, 1961, so as to require the execution of a fresh partnership deed during the said accounting year."

2. Before the Tribunal reliance was placed on behalf of the department on a Division Bench decision of this court in Ganesh Lal Laxmi Narain v. Commissioner of Income-tax [1968] 68 ITR 696 (All). At the time of the hearing of the reference reliance was placed on this decision before the Division Bench which doubted its correctness and directed that the matter be heard by a larger Bench. It is in these circumstances that the matter has come up for hearing before us.

3. Mr. Deokinandan, counsel for the department, has, in the absence of the assessee, very fairly placed the decisions both for and against him. He has pressed for answer only on the second part of the question referred to us, i.e., whether the assessee-firm was entitled to the renewal of registration. He has mainly relied on a decision in Mandyala Govindu & Co. v. Commissioner of Income-tax [1976] 102 ITR 1 (SC). It has been urged by him that the Supreme Court has now finally decided that where the shares of the partners are unequal the presumption laid down under Section 13(b) of the Partnership Act does not apply, and it was necessary for the Income-tax Officer before allowing application for registration to know the shares of the partners in the losses, and as Harish Chandra became major there was variation in the shares of losses. The Income-tax Officer was consequently right in rejecting the application. He has further alleged that the word "shares" used in the proviso to Section 184(7) means shares in both profits and losses and if there is change in the share of loss and it is not evidenced by the instrument of partnership then it amounts to a change in the shares of the partners as contemplated in Section 184(7), and the Tribunal in dismissing the appeal of the department has committed an obvious error of law.

4. A firm has been defined in Section 2(23) of the Act. It is considered as an independent entity for the purposes of assessment. Chapter XVI contains special provision for assessment of registered firms. Sections 182 and 183 provide the manner in which the assessment shall be made. Section 184 read with Rules 22 to 25 lays down the requisites which entitle a firm to get registration. Section 185 deals with the procedure on the receipt of an application for registration. Section 184(7) provides for automatic renewal mentioned in the proviso:

"It is not that a firm to be able to trade must be registered under Section 26A. A firm, registered or unregistered, is an assessee under the Act and can do business as such. However, registration under section 26A 'confers on the partners a benefit', as would appear from the provisions of Section 23(5)............"

Section 184(7) is a departure from Section 26A only to the extent that formerly registration was an yearly affair whereas it is now automatic. Partnership evidenced by an instrument and specification of individual shares of partners are the essentials which are adumbrated and hedged in by other requirements such as signing by all the partners, presentation of application before the end of the previous year, accompaniment of the application by original instrument of partnership, compliance with prescribed form and procedure, renewal only if no change in the constitution of the firm or shares of partners, are the basic requirements, and the incidental and ancilliary provisions have been the subject-matter of judicial exposition. We arc concerned in this case only with one aspect whether there was a change in the shares of the partners with the attainment of majority of one of the partners. The phrase "shares of the partners" used in Section 184(1)(ii) and 184(7)(i) have been used in the same section and should, therefore, be given the same meaning. Identical phrase was used in Section 26A of the Indian Income-tax Act of 1922. While interpreting this provision their Lordships of the Supreme Court held in A. C. Mitter and Sons v. Commissioner of Income-tax [1959] 36 ITR 194, 198 (SC):

"It is manifest that for a true and proper construction of the relevant provisions of the Act, relating to registration of firms, Sections 26, 26A, and 28, and the rules summarized above, have to be read together. So read, it is reasonably clear that the following essential conditions must be fulfilled in order that a firm may be held entitled to registration:

1. That the firm should be constituted under an instrument of partnership, specifying the individual shares of the partners.

2. That an application on behalf of, and signed by, all the partners, containing all the particulars as set out in the rules, has been made.

3. That the application has been made before the assessment of the income of the firm, made under Section 23 of the Act (omitting the words not necessary for our present purpose), for that particular year.

4. That the profits (or losses, if any) of the business relating to the previous year, that is to say, the relevant accounting year, should have been divided or credited, as the case may be, in accordance with the terms of the instrument; and lastly.

5. That the partnership must have been genuine and must actually have existed in conformity with the terms and conditions of the instrument."

5. The question whether shares of the partners in the losses must be specified in the partnership deed also gave rise to a conflict of decisions in various High Courts. A Division Bench of our court in a decision in Hiralal Jagannath Prasad v. Commissioner of Income-tax [1967] 66 ITR 293 (All) held after a consideration of the provisions contained in the Act, rules and the forms that omission to specify in a partnership deed the shares of the partners in losses did not disentitle the firm for registration. This decision and other decisions of various other High Courts came up for consideration before the Supreme Court in Mandyala Govindu's case [1976] 102 ITR 1 (SC) on which reliance has been placed by the counsel for the department. The Supreme Court, after noting the conflict on this aspect, did not decide the question as it was of the opinion that, on the facts of that case, the appeal was bound to fail. The facts in that case were that an instrument of partnership was executed on 5th of January, 1959, and it mentioned three persons, Mandyala Narayana, Mandyala Venkatramaiah, Mandyala Srinivasalu and a minor, Mandyala Jaganmohan, who was admitted to the benefits of the partnership. The shares held by the partners were Narayana 31 per cent. Venkatramaiah 23 per cent., Srinivasalu 23 per cent. and minor, Jaganmohan, 23 per cent. In view of this fact it was held--See [1976] 102 ITR 1, 6 (SC):

"In the case before us the partners having unequal shares in the profits there can be no presumption that the losses are to be equally shared between them."

6. It was further found that--See [1976] 102 ITR 1, 7 (SC):

"The law stated here in the context of Section 253(2) of the Contract Act, 1872, applies equally to Section 13(b) of the Partnership Act, 1932 ; the two provisions are in identical terms. On the facts of the present case and having regard to the scope of Section 13(b) the section has plainly no application.

The other rule that where the shares in the profits arc unequal, the losses must be shared in the same proportion as the profits if there is no agreement as to how the losses are to be apportioned, does not also apply to this case. In this case even if the adult partners bear the losses in proportion to their respective shares in the profits, the amount of loss in the minor's share would still remain undistributed. Will the partners between them bear this loss equally, or to the extent of their own individual shares ? To this the instrument of partnership does not even suggest an answer. There is, therefore, no means of ascertaining in this case how the losses are to be apportioned."

7. The benefits of continuance of registration in the years subsequent to the year of original registration is dependent upon two conditions--first, the assessee files a declaration in Form No. 12 along with its return, second, that there has not been a change in the constitution of the firm or in the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted. It is not necessary to decide for the purposes of this case whether there was a change in the constitution of the firm as we are of the opinion that in view of the decision given by the Supreme Court in Mandyala Govindu's case [1976] 102 ITR 1 (SC), which applies with full force to the facts of the case, there was a change in the shares of losses and, therefore, the assessee was not entitled to renewal of registration. It cannot be disputed that after Harish Chandra had attained majority there was a change in the shares of the losses of the partners. The proportion of losses as a result of Harish Chandra becoming major could not be ascertained from the instrument of partnership deed. The partnership deed is not a part of the paper book; as such it is not possible for us to find out whether the partners between them agreed to share the losses equally or to the extent of their own individual shares and whether losses were to be apportioned pro rata or per capita. As pointed out by their Lordships of the Supreme Court in Mandyala Govindu's case [1976] 102 ITR 1 (SC) we find there is no material for ascertaining in this case how the losses were to be apportioned. We may, however, make it clear that we refrain from expressing any opinion on the correctness of the decisions rendered in Hiralal Jagannath Prasad v. Commissioner of Income-tax [1967] 66 ITR 293 (All) and Ganesh Lal Laxmi Narain v. Commissioner of Income-tax [1968] 61 ITR 696 (All). The decision that we have reached is on the peculiar facts of the case which are more or less identical with the facts of the case of Mandyala Govindu [1976] 102 ITR 1 (SC).

8. In view of what we have stated above, we answer the question by saying that the assessee-firm was not entitled to the renewal of registration for the assessment years 1963-64 and 1964-65. As nobody has appeared for the assessee there shall be no order as to costs.