JUDGMENT A.K. Mathur, J. 1. This is an income-tax reference under Section 256(1) of the Income-tax Act, 1961. On the direction given by this court, the Tribunal has sent the following question of law : "Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was entitled to the continuation of registration for the assessment years 1976-77 and 1977-78 ?" 2. The brief facts giving rise to this case are that the Commissioner of Income-tax after examination of the assessment record for the assessment years 1976-77 and 1977-78 and of the partnership deed executed on November 6, 1972, noticed that the firm comprised the following partners with the shares in profits and losses as mentioned against each name : __________________________________________________________________ Sl. No. Name of the partners Share in profits Share in losses __________________________________________________________________ 1. Ramchandra Gupta 17 per cent. 25 per cent. 2. Hiralal Agrawal 17 per cent. 25 per cent. 3. Ramesh Kumar Gupta 17 per cent. 25 per cent. 4. Ram Kumar Gupta 17 per cent. 25 per cent. 5. Om Prakash Goyal 16 per cent. Nil as minor. 6. Balkishan Goyal 16 per cent. Nil as minor. __________________________________________________________________ 3. On January 5, 1974, one of the two minors admitted to the benefits of partnership, viz., Om Prakash Goel, attained majority and elected to continue as a partner vide supplementary agreement dated January 6, 1974. As per Clause 2 of the said supplementary agreement, Clause 5 of the original deed of partnership dated November 6, 1972, stood amended as under: __________________________________________________________________ Sl. No. Name of the partners Share in profits Share in losses __________________________________________________________________ 1. Ramchandra Gupta 17 per cent. 20 per cent. 2. Hiralal Agrawal 17 per cent. 20 per cent. 3. Ramesh Kumar Gupta 17 per cent. 20 per cent. 4. Raj Kumar Gupta 17 per cent. 20 per cent. 5. Omprakash Goel 16 per cent. 20 per cent. 6. Balkishan Goel 16 per cent. Nil as minor. __________________________________________________________________ 4. Ramchandra Gupta 17 per cent. 20 per cent. 2. Hiralal Agrawal 17 per cent. 20 per cent. 3. Ramesh Kumar Gupta 17 per cent. 20 per cent. 4. Raj Kumar Gupta 17 per cent. 20 per cent. 5. Omprakash Goel 16 per cent. 20 per cent. 6. Balkishan Goel 16 per cent. Nil as minor. __________________________________________________________________ 4. Thus, according to the Commissioner of Income-tax, the amendment in the shares of the partners amounted to change in the constitution of the firm and, therefore, the assessee should have applied for fresh registration under Section 185 of the Income-tax Act, 1961, for the assessment years 1976-77 and 1977-78 whereas in fact the assessee had filed declarations in Form No. 12 for both the said assessment years certifying that there was no change in the constitution and on the basis of these declaration, the Income-tax Officer had allowed continuation of registration for the assessment years 1976-77 and 1977-78, vide assessment orders dated November 18, 1977, and November 24, 1977, respectively. As these orders of the Income-tax Officer granting continuation of the registration appeared to be erroneous as they were prejudicial to the interests of the Revenue, the Commissioner of Income-tax asked the assessee to show cause why suitable remedial action should not be taken. The assessee filed a reply and submitted that there is no change in the deed of partnership and continuation of registration had been properly given, that no fresh deed of partnership was required, that the supplementary agreement between the partners dated January 6, 1974, was valid, that the declaration in Form No. 12 were signed by all the partners and that in view of the Board's instructions dated January 3, 1962, March 20, 1969, and March 4, 1977, a fresh deed of partnership was not necessary. 5. The Commissioner of Income-tax, after considering the various written submissions placed by the assessee, observed in his order under Section 263 of the Income-tax Act that Section 187(2) clearly lays down that where there is a change in the shares of the partners, the same would amount to change in the constitution of firm and in that case, the assessee would have to apply for fresh registration under Section 185 and accordingly the declaration given in Form No. 12 seeking continuation of registration under Section 184(7) was not in order. Section 184(8) clearly provides that where any change in the constitution has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section. The Board's circulars cited by the assessee are only in respect of cases where a minor admitted to the benefit of partnership becomes a full-fledged partner. It has been provided that where there is no change in the profit/loss sharing ratios a new partnership deed may not be necessary. The same would not be applicable to the facts of the instant case where there had been change in the profit/loss sharing ratios and, therefore, in view of the clear provisions of Sections 187(2) and 184(8), the assessee should have sought fresh registration for the assessment years 1976-77 and 1977-78 and a declaration filed in Form No. 12 for these two years was not in order. The Income-tax Officer's action in acting on the said declaration and in allowing continuation of registration for the assessment years 1976-77 and 1977-78 was, therefore, erroneous in so far as it is prejudicial to the interests of the Revenue. The authority, therefore, directed the Income-tax Officer to make fresh assessment in accordance with law. Against this order of the Commissioner of Income-tax, the assessee filed the appeal before the Tribunal. The Tribunal after examining the order of the Commissioner of Income-tax held that the view taken by the Commissioner is not correct, and allowed the appeal of the assessee. Hence, this reference application was moved by the Revenue and reference was called by this court under Section 256(2) of the Income-tax Act. 6. In these circumstances, the aforesaid question was framed by the Tribunal and sent for answer by this court. 7. The Tribunal considered the circular issued by the Board and took the view that the word "change" referred to in Section 187(2) of the Income-tax Act has been taken note of by the Board at the time of passing the circulars dated March 20, 1969, and August 4, 1977, and observed that after completion of the assessment, the same cannot be applied affecting the right of the assessee. It was also observed that while passing the circular dated August 4, 1977, the Board had taken note of the decision reported in Ganesh Lal Laxmi Narain v. CIT [19681 68 ITR 696 (All) and CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (sic) as the Board's circular was passed much later than the decision of the Allahabad High Court in CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (sic). 8. In this background, the Tribunal took the view that the Income-tax Officer was fully justified in granting the continuation of the registration to the assessee and the order of the Commissioner of Income-tax (Appeals) under Section 263 of the Income-tax Act setting aside the assessments made by the Income-tax Officer for the years 1976-77 and 1977-78 is bad in law and the same was set aside. 9. We have heard learned counsel for the parties and perused the record. In fact, the decision of the Tribunal was primarily based on the judgments of the Allahabad High Court in Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696 and CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 235 (sic). The Tribunal has come to the conclusion that the circular dated August 4, 1977, was subsequent to the decision in the case of CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (sic). Therefore, it is presumed that the Board has taken into consideration the subsequent decision of the Allahabad High Court. The view taken by the Tribunal does not appear to be justified. 10. It may be relevant to mention here that there was a conflict of judicial opinion in the Allahabad High Court regarding interpretation of this provision of the Act. In the earlier decision of the Allahabad High Court in the case of Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696, the Allahabad High Court took the view that whenever a minor is admitted for the benefit on attaining majority and is inducted as partner of the firm, change takes place in the constitution and the firm must apply for fresh registration under Section 184(8) of the Act. This view was followed in the judgment in CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (All) (sic). Therefore, the Board keeping in view this judgment, issued circular on March 20,1969. This view was followed in the judgment in CED v. Smt. Ram Sumarni Devi [1984] 147 ITR 233 (All) (sic). Therefore, the Board keeping in view this judgment, issued circular on March 20,1969. Both these judgments came up for consideration before the Full Bench of the Allahabad High Court in the case of Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858 and the Full Bench resolved the controversy and it was observed as under (at page 871) : "Where a minor admitted to the benefits of a partnership, attains majority, and elects to be a partner of the firm, there is no change in the constitution of the firm, but there is a change in the shares of the partners. In case the original instrument of partnership evidences this change, the firm is entitled to continuance of registration under Section 184(7) of the Act." 11. The Tribunal primarily felt persuaded on account of these two earlier judgments of the Allahabad High Court in the case of Ganesh Lal Laxmi Narain v. CIT [1968] 68 ITR 696 and Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858 [FB] (sic). But the Full Bench judgment was not brought to the notice of the Tribunal and the Tribunal disposed of the matter on the basis of the circular of 1969 and the decision of the Allahabad High Court in the case of Ganesh Lal Laxmi Narain [1968] 68 ITR 696 and in the case of Badri Narain Kashi Prasad [1978] 115 ITR 858 (All) [FB] (sic). Therefore, the view taken by the Tribunal does not appear to be well founded. In the case Durgaprasad Rajaram Adatiya v. CIT [1982] 134 ITR 601 (MP), the court held that (headnote) : "A change in the constitution of a firm occurs when there is a change in the identity of the partners or a change in the shares of partners as evidenced by the instrument of partnership. Section 2(23) of the Act defines 'partner' to include a minor admitted to the benefits of the partnership. In view of this special definition there is no change in the identity of the partners for purposes of the Income-tax Act when a minor, on attaining majority, becomes a partner in the firm. Section 2(23) of the Act defines 'partner' to include a minor admitted to the benefits of the partnership. In view of this special definition there is no change in the identity of the partners for purposes of the Income-tax Act when a minor, on attaining majority, becomes a partner in the firm. But the minor, after becoming a real partner as defined by the Partnership Act, starts sharing losses and the question would then arise whether, as a result of it, there is a change in the shares of the partners as evidenced by the instrument of partnership. If the instrument of partnership does not, on a proper construction, disclose how the losses would be shared on the minor becoming a major, it can be said there occurs a change in the shares of the partners as evidenced by the instrument of partnership." 12. A similar view was taken in CIT v. Ghanshyam General Stores [1984] 147 ITR 110 (MP) and CIT v. Jai Durga Rice Mill [1986] 159 ITR 807 (MP). 13. This court has followed the decision of the Full Bench of the Allahabad High Court in Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858. 14. Shri Nema, learned counsel for the non-applicant, submitted that in the present case, the situation is different here. Here a supplementary partnership agreement has been drawn up and the minor has been admitted to the benefits. It has been referred that there was no execution of the supplementary partnership agreement and in that event, there is no change in the position. A supplementary agreement is nothing but a new partnership agreement so far as induction of a new partner is included. Under Section 30 of the Partnership Act, minor is only admitted to the benefit of the partnership benefit only as the minor cannot be inducted as partner. Now when Om Prakash Goyal has become major and been inducted as partner, he will equally share the profits and losses in the firm. It is true that in cases where there is a stipulation that the minor upon becoming major will become a full partner in that case no separate agreement is required and there will be continuation of registration, but in the present case, there is no such stipulation that a minor becoming major will continue to be a partner from the date of attaining majority. This contemplation is not there, and if it had been there, perhaps the assessee would not be required to have executed the supplementary partnership. Sub-section (2) of Section 187(2) of the Income-tax Act lays down that when one or more partners cease to be partners or one of the minors is admitted to partnership, in such a situation, that amounts to change of the partnership firm. Likewise, this also lays down that where all the partners change their respective shares, or some of them, it will amount to change of the constitution of the firm. In the present case, when Om Prakash Goyal attained majority and has been inducted as partner, that means that there is induction of a new partner in the firm and he will share profits and losses and it will amount to change in the constitution of the firm. He will be the assessee for the profit and loss. For this purpose, he will continue to be a partner in his own right and this will certainly amount to change in the constitution of the firm. 15. Mr. Nema, learned counsel for the respondent, submitted that the supplementary partnership deed was nothing but a continuation of the original deed with minor modification. Though it may be a minor modification it will amount to change in the constitution of the firm as minor was at that time, inducted as partner with the consent of the other partners and he had limited rights. He could not share the loss but now becoming a full-fledged partner, he can share the profit and loss both and he becomes for all purposes, a partner in his own right. Therefore, by styling supplementary partnership deed, it will not make any difference. Learned counsel further submitted that the authority decided the matter in view of the circulars issued by the Board and the circular of the Board is binding on the subordinate authorities. Learned counsel invited our attention to Navnit Lal C. Javeri v. K.K. Sen, AAC of I.T. [1965] 56 ITR 198 (SC). So far as the legal sanction of the circular is concerned, there are no two opinions that they are binding on the authorities of the income-tax as these circulars are issued under Section 119 of the Income-tax Act. Learned counsel invited our attention to Navnit Lal C. Javeri v. K.K. Sen, AAC of I.T. [1965] 56 ITR 198 (SC). So far as the legal sanction of the circular is concerned, there are no two opinions that they are binding on the authorities of the income-tax as these circulars are issued under Section 119 of the Income-tax Act. It has legal value and it cannot be disputed, but at the same time, Sub-section (2) of Section 187 has been interpreted by this court as well as by the Allahabad High Court and the law has been laid down by this court, therefore, the circulars are not binding to that extent unless the new circular has been issued keeping in view the decision of this court as well as the Allahabad High Court. Once Section 187 of the Income-tax Act has been interpreted, this circular cannot be binding on this court, and the circular will not change the position. The learned Tribunal made certain observations regarding the fact that before issuance of the circular, the authorities must have taken into consideration the decision of the Allahabad High Court. That may be true or may not be true but the Full Bench decision has overruled both these decisions and the Full Bench decision will prevail. In view of the fact that we have taken the view that induction of Om Prakash Goyal as a partner of the firm amounted to change in the constitution, therefore, the reference is accordingly answered, 16. Hence, the reference is answered in favour of the Revenue and it is held that the induction of a minor partner, Om Prakash Goyal, as a member of the partnership firm, will amount to change in the constitution of the firm.