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Issues:
- Registration of the assessee-firm for the assessment year 1972-73. Analysis: The case involved a partnership firm applying for registration for the assessment year 1972-73, with a partnership deed effective from July 1, 1970. The profit/loss sharing ratio among the partners was specified in the deed. The Assessing Officer denied registration as profits had been distributed equally among partners, contrary to the partnership deed. The Appellate Assistant Commissioner upheld this decision. However, the assessee clarified that no profits were credited to partners' capital accounts at the time of filing returns. The error in profit allocation was attributed to a clerical mistake, rectified promptly by crediting profits as per the partnership deed. The Tribunal accepted this explanation and granted registration to the firm. The Tribunal found the assessee's explanation regarding the profit allocation error to be credible. The mistake arose from the previous partnership's equal profit sharing arrangement, which was inadvertently carried forward. The Tribunal determined the firm's genuineness and allowed registration, considering the timely rectification of the error. Notably, the correction was made before the assessment was finalized, ensuring the correct profit allocation per the partnership deed. The Court affirmed the Tribunal's decision, emphasizing the rectification of the error and the genuine nature of the firm. Consequently, the Court ruled in favor of the assessee and against the Revenue, upholding the registration granted by the Tribunal for the assessment year in question. In conclusion, the Court's judgment favored the assessee, acknowledging the rectification of the profit allocation error and the genuine nature of the firm. The timely correction of the mistake and adherence to the partnership deed's profit-sharing ratio were pivotal in securing registration for the firm for the relevant assessment year.
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