2003 (5) TMI 39 - HC - Income Tax

Held that unless the partnership firm had carried on business in accordance with terms of an instrument of partnership which was operative during the accounting year it cannot claim the benefit of registration as it could not be registered in respect of the following assessment year. The Commissioner of Income-tax has set aside the order of registration dated September 2 1977 for the assessment year 1976-77 on the ground that there was no evidence as to when the firm came into existence prior to the assessment year 1975-76. More so the return filed on behalf of the firm stood superseded by the return filed by Sri J. P. Bhatia in individual capacity. - Firm was not entitled to registration in the assessment year 1976-77

Summary

The High Court of Allahabad ruled against the assessee in a tax case, stating that a partnership firm must have carried on business according to a valid partnership agreement to be eligible for registration. The court held that lack of evidence of firm's existence prior to a certain year led to denial of registration benefits for the assessment year in question. The court answered the referred questions in favor of the Revenue and against the assessee.