9911796707
TMI Blog2003 (4) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership certified by only one of the two partners. As per provisions of sub-s. (2) of s. 184, the assessee was required to furnish a certified copy of the instrument of partnership duly signed by all the partners along with the return of income. The AO, therefore, issued a show-cause notice as to why the assessment should not be completed in the status of an AOP. In response to such show-cause notice, the assessee immediately filed a certified copy of the partnership deed duly signed by two partners and by relying on the various judgments reported in CIT vs. M.N. Ghosh & Sons (1987) 62 CTR (Pat) 219 : (1987) 167 ITR 125 (Pat), CIT vs. J.B. Coal Traders (1986) 51 CTR (Pat) 369 : (1987) 164 ITR 450 (Pat) and Ganga Motor Service vs. CIT 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the partners of the firm, has not been complied with. Under such circumstances, where a firm does not comply with the provisions of s. 184(2) of the IT Act, 1961, the assessment has to be framed as provided in s. 185 of the IT Act, 1961. In this section, it has been specifically provided that "where a firm does not comply with the provisions of s. 184 for any assessment year, the firm shall be assessed for that assessment year in the same manner as an AOP, and all the provisions of this Act shall apply accordingly". In the instant case, the firm has not complied with the provisions of s. 184(2) of the IT Act, 1961. The AO has complied with the provisions of s. 185 and he has assessed the appellant in the status of a firm but assessed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that immediately on receipt of the show-cause notice, the assessee rectified the defect and furnished a certified copy of the instrument of partnership signed by both the partners. Thus, he contended that the assessee could not have been treated as an AOP merely for such technical lapse. He relied on the following judgments: (i) CIT vs. Hyderabad Stone Depot & Ors. (1977) 109 ITR 686 (AP)(FB): Where the High Court has held that non-mentioning of minor's share in losses in column No. 6 of the application filed for registration was a curable defect and hence the assessee was entitled to registration. The High Court also observed that the intent of the law is not that the Revenue should gain a larger amount of tax by refusing registration t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avily relied on the orders of authorities below. He drew our attention to Explanation to s. 184(2), which provides that a copy of the instrument of partnership shall be certified in writing by all the partners. Drawing our attention to sub-s. (2) of s. 184, the learned Departmental Representative submitted that such certified copy of the partnership deed was required to be filed along with the return of income. Thus, he submitted that the assessee did not fulfil the mandatory requirement of law and, therefore, the assessee was not entitled to the benefit of registration. 6. We have heard both the parties at some length and given our thoughtful consideration to the rival submissions. We have also examined the facts, evidence and material o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till asst. yr. 1992-93, which provided that in case the application for registration was found defective, the AO was duty bound to intimate the defect in the application for registration and the assessee could rectify the defect. In case such defect is rectified, the assessee would be entitled to registration. Such provision does not exist now in the statute w.e.f. asst. yr. 1993-94. However, we are of the considered opinion that in order to advance the cause of substantial justice, such technical defect can be rectified before completion of the assessment. The Courts/quasi-judicial Tribunals have inherent power to allow such technical defects to be rectified. Reliance in this regard is placed on the judgment of Patna High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act and, therefore, the assessee is entitled to the benefit of registration. Accordingly, we set aside the order of the CIT(A) and direct the AO to treat the assessee-firm as a registered firm. 7. The next ground relates to sustaining of disallowance on account of interest paid to partners at Rs. 95,343. Briefly stated, the facts of the case are that the AO observed that as per provisions of s. 40(b)(iv) of the IT Act, payment of interest to partners can be allowed to partners only if it is authorised by the partnership deed and the same is not in excess of 18 per cent. In this case, the payment of interest was found to have been authorised by the partnership deed. But, according to the AO, specific terms had not been set out. O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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