TMI Blog1987 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... unting year can be corrected and reconciled in terms of the partnership agreement before the assessment is made. In order to answer the question, it is necessary to state the relevant facts in brief. The assessee-firm, M/s. Hari Sahu, was constituted by a partnership deed dated April 30, 1974, to carry on business with effect from April 1, 1974, with the following two partners : Profit Loss (1) Hari Sahu 40% 90% (2) Gauranga Sahu 25% 10% Two minors, namely, Sankar Kumar Sahu and Kailash Chandra Sahu, were admitted to the benefits of the partnership giving them 25% and 10% share in the profit. An application in Form No. 11 along with the original deed of partnership was filed on March 31, 1975, for registration of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitted that since it was the first assessment of the firm, Form No.11 which was filed for registration of the firm simply stipulated that the profit and loss would be adjusted in terms of the partnership deed unlike the statement contained in Form No. 12 which speaks of allocation of profit and loss having been already made in terms of the partnership deed. It was, therefore, submitted that the assessee was entitled to make necessary correction, and inasmuch as the allocation had already been made and the profit and loss account was already reconciled in accordance with the stipulations made in the partnership deed, there was no justification to refuse registration to the firm under section 184 of the Income-tax Act. I fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court held that inasmuch as the error in the actual allocation of profit was corrected subsequently, it could not be said that the shares to the partners were not given in terms of the partnership deed and the assessee should not be made to suffer on that account. The Allahabad High Court has also taken a similar view in both the cases CIT v. Hari Ram Khanna [1979] 116 ITR 886 and CIT v. Krishna Steels [1980] 124 ITR 47. In CIT v. Krishna Steels [1980] 124 ITR 47, the Allahabad High Court has further observed that the prescribed Form No. 11 for application for registration of a firm does not require that the profits or losses should be divided or credited annually among the partners. Allocation of losses in the balance-sheet after ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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