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1961 (8) TMI 48 - KERALA HIGH COURT

1961 (8) TMI 48 - KERALA HIGH COURT - [1962] 45 ITR 380 - Income-Tax Referred Case No. 25 of 1959 - Dated:- 16-8-1961 - Ansari (CJ) And Govinda Menon, JJ. For the Assessee : P. Govindan Nair, K. V. R. Shenoi, P. K. Kurien, G. Balagangadharan Nair and K. Sukumaran For the Commissioner : G. Rama Iyer JUDGMENT Ansari, CJ. The assessee is a firm consisting of eight partners, which was constituted under the instrument of September 10, 1953, and the profit for the year ending March 31, 1957, amounted .....

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aid year, and the amount was credited to the reserve account on April 10, 1957, at the same time narrating the share of each partner therein, which corresponds with the partner's profit-sharing ratio under the deed of partnership. The firm applied for registration for the assessment year 1957-58, whose previous year would end on March 31, 1957, and the application was on July 20, 1957. It was accompanied by the forms required under rule 6 of the Income-tax Rules; but the Income-tax Officer r .....

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out the profit of the previous year having been divided or credited, the application for registration had been properly rejected, because of the absence of division of profits among the partners and of the shares of the profit in the accounts of each partner. The Appellate Tribunal has disallowed the appeal on the ground of there having been neither division nor crediting of profits in pursuance of the resolution passed on April 10, 1957, and, therefore, the requirement of rule 6 not having been .....

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ttached to rule 6 of the Income-tax Rules, 1922, do not require profit having been actually credited in the accounts of each partner of the firm with the result that, should the profit be credited to the partner elsewhere, that would be sufficient compliance with the form attached to rule 6. We also think those words indicate the ownership in the profits ceasing to be joint and the shares of each partner having become separated rather than each partner being required immediate use of the profits .....

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ofit, and we do not see why the severance and fixation of the shares should further be emphasised by the several entries being made in the respective accounts of each partner. The absence of such entries is explainable on the ground that the partners would then become entitled to draw upon the profit and getting immediate benefit in the profits of the firm is not the requirement for obtaining registration under rule 6. We, therefore, feel that the absence of entries in the separate accounts of e .....

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