TMI Blog1977 (3) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the deed, the minor was also made to share losses along with profits which is contrary to s. 30 of the Partnership Act. He, therefore, wanted a rectification removing this defect. Thereupon, the four major partners wrote a letter to the Registrar saying that the minor was admitted to the benefits of the partnership with the consent of all the partners and he had nothing to do with the losses of the firm. They informed the Registrar that they agreed to record their consent and amend the application accordingly. On this letter, the Registrar accorded registration to the firm on January 10, 1956. For the assessment year 1956-57, an application was also made (under the I.T. Act) for registration and the same was granted. Renewals were granted up to the assessment year 1961-62. It may be mentioned here that for assessment year 1961-62, the accounting year was 1960 and for the next year of assessment 1962-63, the accounting year was 1961. By virtue of the powers conferred on him under s. 33B of the Indian I.T. Act, 1922, the CIT called for examining the records and found that the deed of partnership violated the provisions of s. 30 and, therefore, the registration granted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was that losses were to be shared by the major members alone equally. The firm made the application for registration on 30th of June, 1962, in Form 11 and also for continuation of registration in Form 12. The ITO refused registration for this year also on the ground that the new partnership deed was not operative in the relevant year of account, viz., the calendar year of 1961, during which the old defective deed was in operation and, therefore, the assessee was not entitled to registration as in the earlier years. The AAC in appeal agreed with this view. The matter was once again carried to the Tribunal. There, it was argued that the applications for registration and renewal were valid inasmuch as the minor was shown to have a share in the profits only and not liable to share losses which were to be shared equally by the major partners. It was contended there that the grounds on which the Supreme Court upheld the refusal of registration for the earlier years were no longer in existence for the assessment year 1962-63. It was also argued that the letter of 18th December, 1955, filed before the Registrar and the new deed of partnership dated June 28, 1962, should be sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the ITO was satisfied with the application and should have, therefore, granted registration to the firm. His refusal to grant registration is, therefore, contrary to ss. 184 and 185. On the other hand, Sri P. Rama Rao, the learned standing counsel for the I.T. department, points out that the scope of s. 185(2) is only limited to intimating to the firm any defects in the application and does not extend to the basic invalidity of the partnership deed. If the partnership deed itself was not in accordance with law and is vitiated by any illegality then, according to Sri Rama Rao, s. 185(2) has no application. He supported the view taken by the I.T. authorities as well as the Tribunal that the partnership deed of June 28, 1962, has no application to the calendar year 1961 for which the assessment year is 1962-63. It is for this year that registration was asked for and refused. The partnership deed of June 28, 1962, could not apply to the calendar year of 1961 and, therefore, the Tribunal and the departmental authorities were right in thinking that the old defect in the partnership deed of 1955 alone continued to apply. Such being the case, the principle enunciated by this court and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before 31st of December, 1961. What the ITO can do under s. 184(4) is only to entertain an application even at a late stage if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year. But he has no jurisdiction to grant registration on a partnership deed which was not in force during the relevant period, namely, the calendar year 1961. He has no power or jurisdiction to condone the delay in filing the partnership deed or its copy. In fact, as we have pointed out, by 31st of December, 1961, the new partnership deed curing the defects did not come into being and the old partnership deed was still in force. Therefore, the ITO was very much right in refusing to grant registration on the basis of the old partnership deed, without taking into account the partnership deed which came into existence after the expiry of the accounting year of 1961. The Tribunal is very much right in upholding this decision. This view is fully supported by the decision of the Supreme Court in N. T. Patel Co. v. CIT [1961] 42 ITR 224. There, a new instrument of partnership was in existence in the accounting year, but it did not specify ..... X X X X Extracts X X X X X X X X Extracts X X X X
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