9911796707
TMI Blog1970 (5) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner, and, thereafter, in second appeal, before the Income-tax Appellate Tribunal. The assessee-firm was constituted under a partnership deed dated December 22, 1956, and consisted of 5 partners, Hargovind, Jawahar Mal, Madan Lal, Murlidhar and Ratan Lal, and one Ram Kishore, a minor, was admitted to the benefits of the partnership. Clause 2 of the partnership deed provided that the partnership commenced on November 4, 1956, and clause 6 of the partnership deed provided that in the case of death or retirement of a partner the firm would not dissolve. One of the partners, Madan Lal, died on August 22, 1958. Thereafter, a partnership deed dated October 13, 1958, was executed creating a partnership between Hargovind, Jawahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been that under the partnership deed of October 13, 1958, and not under the partnership deed of December 28, 1956. At the instance of the assessee the Tribunal has referred the following two questions: " 1. Whether, on the facts and in the circumstances of the case, and having particular reference to clause 6 of the partnership deed made on December 28, 1956 (annexure " B "), the firm is entitled to make an application for renewal of registration for the assessment year 1959-60 on the basis of the deed made on December 28, 1956 (annexure " B ")? 2. If the answer to the above question is in the negative, whether an application under section 26A should have been made for original registration and should have been signed by the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to apply for renewal of registration. The question essentially is whether the assessee should have been granted renewal of registration for the assessment year 1959-60 on the basis of the deed of December 28, 1956, and that is what we understand of the first question referred by the Tribunal to be. On the merits of the case, the first point to be considered is whether the firm constituted under the deed of December 28, 1956, came to an end and was followed by a new firm created by the deed of October 13,1958, or whether the same firm continued throughout and was merely reconstituted by the deed of October 13, 1958. A comparison of the two deeds persuades us to the former conclusion. In the deed of 1956 the partners were Hargovind, Jawah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted only to the benefits of the partnership. Then, there is no recital in the deed of 1958 to suggest that the previous firm was being continued. On the contrary, the deed recites that the parties " shall carry on business in partnership ........ " and that " the partnership commenced on Bhadau Sudi Six Sambat Do Hazar Pandrah, corresponding to 19th September, 1958. . . ." Moreover, while clause 4 of the deed of 1956 merely provided that the capital of the partnership would be contributed by the partners, clause 4 of the deed of 1958 also declared that interest would be allowed on such capital at six per cent. per annum. As to the division of profits, there was also a difference. Under clause 5 of the agreement of 1958, the net profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant previous year and, therefore, had no income at all during that period. There is also the consideration that the partnership deed, which is relevant for the purposes of registration under section 26A of the Indian Income-tax Act, is that operative during the account year relevant to the, assessment year for which registration is claimed. That view was expressed in a number of cases and finally received the authority of the Supreme Court in R. C. Mitter & Sons v. Commissioner of Income-tax. In respect of the assessment year 1959-60 the deed operative during the relevant previous year was the deed of 1956. The firm constituted under that deed was the firm which made the application for renewal of registration, as is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dissolved and was followed by the firm constituted under the deed of 1958. Moreover, the former firm having been dissolved already before the application was made; it was illogical to expect that its constitution would remain unaltered on the date of the application. The law contemplates an application under section 26A in respect of those firms also which have been dissolved. That consideration is sufficient to demonstrate that in construing the words " remain unaltered " in the prescribed form of the application to mean " remain unaltered on the date of the application ", the Tribunal has imposed a construction not warranted in law. It seems to us that the words " remain unaltered " must be read in relation to the previous year relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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