Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
CGST - Acts + GST Rates GST Ntf. GST Forms GST - Manual GST - FAQ State GST Acts SGST Ntf. I. Tax Manual
Extracts
Home List
← Previous Next →

Chintalapati Ranga Naikulu and another Versus Commissioner of Income-Tax, Andhra Pradesh

[1963] 48 ITR 968 - Case Referred No. 8 of 1961 - Dated:- 22-6-1962 - P. Chandra Reddy (CJ) And Mohamed Mirza, JJ. For the Assessee : K. Ranganathachari For the Commissioner : C. Kondaiah JUDGMENT P. Chandra Reddy, CJ. The following question of law is referred under section 66(1) of the Indian Income-tax Act for the opinion of this court, namely: "Whether the firm is entitled to registration under the Act even if the whole of its divisible profits are not divided among the partners?" T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of registration were not fully complied with by the assessee in that respect; and (2) A portion of the profits carried to the charity account amount to distribution of profits among others than those who are partners of the firm." This order of the assessing authority was confirmed on appeal by the appellate Assistant Commissioner and on further appeal by the Income-tax Appellate Tribunal though the Tribunal disagreed with the department as regards the second ground of rejection in view of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ded between the partners, ₹ 312-8-0 was credited to the charity account of the two temples and ₹ 356-2-11 was carried forward to the next year's account. At the request of the assessee, the Tribunal referred the abovementioned question under section 66(1) for the opinion of this court. It is argued in this reference by Sri Ranganathachari, learned counsel for the assessee, that failure to divide a small portion of the profits, namely, ₹ 356-2-11 out of ₹ 20,668-10-11 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or super-tax. (2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed, and it shall be dealt with by the Income-tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under the section shall be published in the official gazette and they shall thereupon have effect as if enacted in the Income-tax Act. Income-tax Rules 2 to 6B lay down the details of the procedure for making an application for registration of the firm as envisaged in section 26A extracted above. Rule 2 requires such an application to be signed by all the partners personally and to be made before the income of the firm is assessed under section 23. Under rule 3, the application should be accompa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m, there are Sections A and B. Section A has to contain particulars of the firm as constituted at the date of application and Section B has to contain the particulars of the apportionment of the income, profits or gains (or loss) of the business in the previous year between the partners who in that previous year were entitled to share therein. Rule 6 makes provision for the certificate of registration to be renewed for a subsequent year on an application made in that behalf in accordance with th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

correct. It is thus plain that one of the essential conditions to be fulfilled in order that a firm may be entitled to registration is that the profits (or loss, if any) of the business relating to the previous year, that is to say, the relevant accounting year, should have been divided or credited, as the case may be, in accordance with the terms of the instrument. Therefore, there can be no doubt that if the divisible profits are not allocated to the partners of the firm, one of the essential .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rejection of the registration. It is worthy of note that in the deed of partnership in question the term relating to division of profits says: "The accounts of the firm shall be closed to profit and loss at least once in every year after the commencement of the business by our firm and the resulting net profit or loss shall be adjusted in equal shares to the accounts of the partners." Clearly, the instrument of partnership contemplates the division of all the profits and it leaves no s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Court in St. Joseph's Provisions Stores v. Commissioner of Income-tax [1962] 45 I.T.R. 380. We do not think that the ruling helps the assessee in any way, since the facts of that case have no resemblance to those herein. There the share of each partner was carried to the reserve fund and each partner was shown as having contributed his share to the reserve fund. Ansari C.J. and Govinda Menon J., who constituted the Bench, thought that his was tantamount to division of profits in the relevant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he learned judges on the language of the certificate to be given under that section came to the conclusion that the certificate to be given by the partners was not that the profits would be divided or credited within some fixed period and that, where the certificate was given in good faith in the prescribed form, if the applicants did constitute a firm, the firm was entitled to be registered. It should be remembered that in that case the certificate given was that the profits of the assessment y .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in that case was whether it was the two firms of the constituent members thereof that entered into partnership with an individual and whether the partnership so constituted was a valid partnership. In the decision of that question, one of the points that came up for consideration was whether the fact that profits were not credited to the individual accounts of the constituent members of the two firms but were credited to the accounts of the two firms was material and whether that indicated that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version