JUDGMENT V.G. Oak, C.J.
1. The short point that arises for consideration in this petition under Article 226 of the Constitution is whether change of name amounts to a change in the constitution of a firm. The point arises thus : Two persons, Parasrara and Ishwar Lal, entered into partnership. The deed of partnership is dated April 30, 1963. Their shares were 60% and 40% respectively. It was agreed that the business of the firm should be carried under the name and style of Messrs. White ways General Stores as its head office, and Messrs. Anarkali as its branch office. The firm applied for registration for the assessment year 1964-65. Registration was granted. It was renewed for the assessment year 1965-66.
2. On April 1, 1965, the two partners executed an agreement in order to change the name of the firm. The name of the firm at the head office was changed from "Messrs. Whiteways General Stores" to "Messrs. Delight Stores" and the name "Messrs. Anarkali" at the branch office was changed to "Royal Hosiery."
3. At the time of assessment for the years 1966-67 and 1967-68, the firm applied for renewal of registration. The Income-tax Officer, Lucknow, passed three orders on July 27, 1968. By one order, he declined to renew registration on the ground that the name of the firm has been changed. Two assessment orders were passed for the two assessment years on the footing that it was an unregistered firm.
4. Two appeals were filed by the firm against the orders dated July 27, 1968. Both the appeals were dismissed by the Appellate Assistant Commissioner, Lucknow. The firm, Messrs. Delight Stores, filed four revisions against various orders. Two revisions were directed against the orders of the Income-tax Officer, while two revisions were directed against the two orders of the Appellate Assistant Commissioner. AH the four connected revisions were dismissed by the Commissioner of Income-tax, Lucknow, on November 26, 1969. In this writ petition, Messrs. Delight Stores, Lucknow, have challenged all these orders passed by respondents Nos. 1, 2 and 3.
5. It is common ground that Parasram and Ishwar Lal have continued as partners of the firm in spite of the agreement dated April 1, 1965, and their shares have remained unaltered. The only change is alteration of the name of the firm.
6. Section 184 of the Income-tax Act, 1961, provides for registration of firms. An application for fresh registration may be made under Sub-section (1) of Section 184. Sub-section (7) of Section 184 states ;
"Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year:
Provided that-
(i) there is no change in the constitution of the firm or the shares of the partners . . . . "
7. The question, therefore, arises whether the change of name of the firm has resulted in a change in the constitution of the firm. If there has been such a change, the assessee is not entitled to renewal of registration. On the other hand, if there has been no change in the constitution of the firm the assessee is prima facie entitled to renewal of registration.
8. According to Clause (23) of Section 2 of the Income-tax Act, 1961, the expressions "firm", "partner" and "partnership" have the same meaning as in the Indian Partnership Act. We have, therefore, to turn to the definition of these terms in the Indian Partnership Act.
9. These terms have been defined in Section 4 of the Indian Partnership Act. Section 4 states:
"'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm', and the name under which their business is carried on is called the 'firm name'."
10. It is true that the expression "firm name" has been defined in Section 4 of the Indian Partnership Act. But it does not follow that firm name is an essential ingredient of the constitution of a firm. It is possible for a firm to carry on business without assuming a firm name.
11. We have to consider whether in the present case there has been a change in the constitution of the petitioner firm. The expression " change in the constitution of the firm" has not been explained in Section 184 of the Income-tax Act, 1961. But the expression "change in the constitution of a firm" again appears in Section 187 of that Act. Sub-section (2) of Section 187 of the Income-tax Act, 1961, states:
"For the purposes of this section there is a change in the constitution of the firm-
(a) if one or more of the partners cease to be partners or one or more new partners are admitted ....
(b) where all the partners continue with a change in their respective shares or in the shares of some of them."
12. It will be seen that according to Sub-section (2) of Section 187 of the Income-tax Act, 1961, the change in the constitution of a firm may come about in two ways--firstly, some partners may leave the firm, or some new partners may join a firm ; secondly, the shares of the various partners may be altered. The language of proviso (1) of Sub-section (7) of Section 184 of the Act suggests that a change in the shares of partners is not a change in the constitution of the firm. The plan is somewhat different from that in Sub-section (2) of Section 187 of the Act. Whether we consider the plan of the proviso to Sub-section (7) of Section 184 or that of Sub-section (2) of Section 187, we find no indication that a mere change of name amounts to a change in the constitution of the firm. The respondents were, therefore, wrong in holding that there has been a change in the constitution of the firm by the mere fact that the name of the firm has been changed from "Messrs. Whiteways General Stores" to "Messrs. Delight Stores."
13. In the order, annexure "F", dated July 27, 1968, the Income-tax Officer rejected the assessee's application for renewal of registration on the ground of change of name. As explained above, the view taken by the respondents on this question is not correct. Annexure "F", passed by the respondent No. 1, and the subsequent orders passed by respondents Nos. 2 and 3 are, therefore, liable to be quashed.
14. Annexures "D" and "E" to the writ petition are copies of the two assessment orders passed by respondent No. 1 for the two assessment years. In these orders the status of the assessee was described as unregistered firm. That description may have to be amended in the light of our judgment. A direction will, therefore, be issued to respondent No. 1 accordingly.
15. Mr. Brij Lal Gupta, appearing for the department, invited our attention to certain rules and forms which have been prescribed under the Income-tax Act, 1961. Rule 24 provides for declaration for continuation of registration. The rule refers to Form No. 12. According to Form No. 12, the declaration on behalf of a firm should run thus :
"We, on behalf of..... (name of firm) declare that . . . . "
16. According to Mr. Brij Lal Gupta, the name of the firm must be contained in such a declaration. It is true that it is very convenient to have a firm name for many purposes. But it does not follow that the name of a firm is an essential ingredient or forms part of the constitution of the firm.
17. The petition is allowed with costs. The order of respondent No. 1 refusing renewal (annexure "F", dated July 27, 1968), the two orders of respondent No. 2 (annexures "G" and "H" to the writ petition), and the order of the Commissioner of Income-tax, Lucknow (annexure "I"), to the writ petition, are quashed. We direct respondent No. 1 to make the consequential amendments in the two assessment orders dated August 27, 1968 (annexures "D" and "E" to the writ petition), in the light of our judgment.