New Form Nos. 11, 11A and 12 incorporating provisions of Explanation inserted by Taxation Laws (Amendment) Act, 1970 not to be insisted upon for assessment years 1971-72 and 1972-73 but firms be allowed opportunity to file application in new forms - Income Tax - 70/1971

Circular 70 Dated 11/12/1971 New Form Nos. 11, 11A and 12 incorporating provisions of Explanation inserted by Taxation Laws (Amendment) Act, 1970 not to be insisted upon for assessment years 1971-72 and 1972-73 but firms be allowed opportunity to file application in new forms CLARIFICATION 1 1. Section 185(1) has been amended by the Taxation Laws (Amendment) Act, 1970, by the insertion of an Explanation, under which a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar of any other partner to whom the first-mentioned partner does not stand in the relationship of a spouse or a minor child. The amendment of section 185(1) is effective from April 1, 1971. Accordingly, registration may be refused to a partnership firm by virtue of the Explanation only for the assessment year 1971-72 and subsequent years. Similarly, a firm, which has been enjoying the benefit of registration for assessment year 1970-71, is liable to lose the benefit if the Explanation applies to it for the previous year relevant to the assessment year 1971-72 or any subsequent year. In consequence of this provision, the prescribed application Form Nos. 11, 11A and 12 have been suitably amended to provide for a declaration by the firm to the effect that none of the partners of the firm was at the relevant time a benamidar of another partner to whom he is not related as a spouse or minor child. This has been done through Notification dated 31-5-1971, regarding the Income-tax (Fourth Amendment) Rules, 1971, which came into force on April 1, 1971. 2. It is likely that in respect of the assessment for the year 1971-72 firms might have filed application for registration/continuation of registration in old Form Nos. 11, 11A and 12 without taking into consideration the amendment made in 1971 to the said forms. It has been decided that in the cases of the type discussed above, the Income-tax Officer should allow the firm concerned an opportunity to file the application in the amended Form Nos. 11, 11A and 12, as the case may be, for the assessment year 1971-72 within a period of one month of receipt of intimation by the firm from the Income-tax Officer regarding the requirement of filing the application in the amended form. If the firm furnishes a fresh application in the said amended form, the Income-tax Officer should dispose of such an application on merits. Circular: No. 70 [F. No. 210/33/71-IT(A-II)], dated 11-12-1971. CLARIFICATION 2 1. Board had vide their Circular No. 70 [F. No. 210/33/71-IT(A-II)], dated 11-12-1971 [Clarification 1] made a provision to the effect that where applications for fresh registration, continuation or renewal of registration in the old Form Nos. 11, 11A and 12 were filed, the Income-tax Officer should allow the firm concerned an opportunity of filing the application in the revised forms within a period of one month from the date of intimation from the Income-tax Officer regarding the necessity of filing the application in the revised form. If such revised application is filed, the same should be disposed of on merits. This was applicable for the assessment year 1971-72 only. 2. Fresh representations have been received to the effect that the new forms were not available in certain areas and the assessees had to file the applications on the existing forms for the assessment year 1972-73 also. 3. It has been decided by the Board that in order to remove hardship in such cases, the instructions contained in the Board's Circular No. 70, dated 11-12-1971 are to be extended so as to cover the assessment year 1972-73 as well. Circular: No. 99 [F. No. 210/24/72-IT(A-II)], dated 21-12-1972.