2009 (9) TMI 629 - HC - Income Tax

Assessment Status of Firm Certificate copy of partnership deed to be furnished if assessment was claimed in status of firm for an assessment year commencing from 1993-94 irrespective of whether assessee was assessed as firm up to 1993-94 Mandatory requirement - if the assessee had not in fact produced the certified copy of the deed of partnership when the assessment was taken by the officer then the assessee is not entitled to assessment in the status as a firm

Summary

Issues:
Assessment status of the assessee as a "firm" for the years 1993-94 and 1994-95.

Analysis:
The primary issue in this case revolves around the denial of status claimed by the assessee as a "firm" for the assessment years 1993-94 and 1994-95. The assessee, previously assessed as a registered firm until 1992-93, faced challenges in maintaining the same status due to major amendments in the Income-tax Act from April 1, 1993. The crux of the matter lies in the requirement to furnish a certified copy of the instrument of partnership along with the income tax return for assessment as a firm under the newly substituted provisions of section 184 introduced with effect from April 1, 1993.

The Commissioner of Income-tax (Appeals) directed the Assessing Officer to make the assessment as a "firm" for the assessee, granting eligible deductions, which was contested by the Department leading to appeals before the Tribunal. The Tribunal upheld the original assessment issued by the Assessing Officer, denying the status as a firm and disallowing claims of deductions due to the non-production of the certified copy of the instrument of partnership for the years in question.

The crux of the legal debate lies in whether the non-filing of the certified copy of the instrument of partnership for the assessment years 1993-94 and 1994-95 is fatal to the assessee's claim for assessment as a "firm." The contention of the assessee's counsel was that since there was no change in the deed of partnership, the firm should be entitled to be assessed in the same status for subsequent years without the need for producing the certified copy. However, the standing counsel argued that the requirement to produce the certified copy is mandatory for any assessment year commencing from 1993-94 onwards, even if the assessee was previously assessed as a registered firm.

The High Court, in its judgment, held that the production of the certified copy of the instrument of partnership is indeed mandatory for claiming assessment as a "firm" for any year starting from 1993-94 onwards. The Court emphasized the importance of compliance with the provisions, stating that failure to produce the certified copy would lead to the disallowance of claims of deductions. The Court directed the Assessing Officer to verify whether the certified copy of the partnership deed was indeed produced during assessments for the relevant years, and based on that verification, grant or deny the status as a "firm" accordingly.

In conclusion, the High Court disposed of the appeals by providing clarity on the mandatory requirement of producing the certified copy of the instrument of partnership for claiming assessment as a "firm" for the relevant years, while also directing a verification process by the Assessing Officer to determine the eligibility of the assessee for the status as a "firm" for the years in question.