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2018 (7) TMI 487 - HC - Income TaxEntitlement to grant of registration and to be assessed as a registered firm - change in the share of the partners in as much as the provision for salary and interest was made for the partners as required in terms of Section 40(b) - Held that:- Payment of salary and / or interest paid to a partner on account of the work he does or further amount contributed for running of the firm. It does not change the share of profits as indicated in the partnership deed. The execution of an instrument laying down the salary to be paid to the partner and / or interest to be paid to the partners for the amount contributed by them had become necessary only for the purposes of claiming benefit of Section 40(b) of the Act. It has no relevance to decide whether or not there has been a change in the constitution of the firm or share in the partners for the purposes of being assessed as a partnership firm. As the appellant firm was already assessed as a partnership firm for the earlier assessment i.e. for Assessment Year 1992-93, by virtue of subsection 3 of Section 184 of the Act, the appellant firm would continue to be assessed as a partnership firm. This is so as there is no change either in the constitution or in the share of the partners. Whether the amended section would require the assessee to file a certified copy of the partnership deed along with the return of income? - Held that:- requirement of a certified copy of the instrument of the partnership deed being filed along with the return of income for assessment years commencing from 1st April, 1993, only applies to firms which seek to be assessed as a partnership firm under the Act for the first time after 1st April, 1993. There is no warrant to restrict the meaning and the scope of subsection 3 of Section 184 of the Act. Accepting the submission on behalf of the Revenue would necessarily require reading words into subsection 3 of Section 184 of the Act to the effect that it would apply in respect of the assessment as a firm was first sought “after 1st day of April, 1993”. It is a settled position in law that fiscal statute is to be strictly construed As the appellant firm was assessed as a partnership firm prior to Assessment Year 1993-94 and as there has been no change in share of the partners, the appellant assessee would continue to be assessed as a partnership firm in the subject assessment year. Decided in favour of the appellant assessee and against the respondent revenue.
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